Welcome to "The Long & Short of the Week Ahead", a production of Eurizon SLJ Capital that takes a look at the macro-economic themes of the week ahead and has been recorded for professional investors.
My name is Matt Jones, Head of Distribution for Eurizon SLJ Capital, and I'm joined by Neil Staines, Senior Portfolio Manager.
Welcome back, Neil. It's great to have you here with us again.
Thank you very much Matt. It's great to be here.
Whilst it might have felt a little bit quiet, perhaps from a macro perspective over the last week, and maybe next week might be very little different. There are some key data points, however which I think are gonna be of interest. So perhaps you can just highlight what you're going to be keeping an eye on in the week ahead.
Yeah, thanks very much, Matt. After a relatively quiet week in the macrospace least from a data perspective next week looks set to be much of the same. However, there are a few areas of distinct interest over the course of next week with geopolitical development, the known unknown. Firstly in the US the debate over the underlying strength of aggregate demand or economic activity, continues to dominate Fed Minutes from midweek highlighted a more balanced view of economic development noting economic risks remain to the downside but markets discounted this relative to recent better than expected economic data payrolls and retail sales notably. We've remained more cautious on the underlying US economic trajectory and the non-linear downside risks to demand that we have discussed regularly in recent blogs. In noting that several of the more high frequency sentiment and activity data have dropped to very depressed levels of late, this week's manufacturing on Wednesday and Services ISM on Friday will be a key focus. Now we have to wait until the following week for payrolls, which contrary to popular belief is not on the first Friday of every month, but on the third Friday after the conclusion of the reference week which must include the 12th. And so a small lesson for us there and to bring us a better take on the seasonal adjustments and other distortions, and thus a clearer view of the underlying trajectory in the US economy.
Secondly Japan will continue to be a sharp focus next week with retail sales and industrial production. Data following the rise in the core CPI to 4.2% year on year in January released at the end of this week. In reality while these prints contribute to the monetary policy debate, the core focus of markets will be on the evolution of the monetary policy itself. Under the guidance of the new Bank of Japan, Governor nominee Ueda and deputies Uchida and Himino. Testimony at the end of this week struck a slightly more balanced tone with a continuation of monetary easing central to the narative. But perhaps more uncertainty or open-mindedness, perhaps about the role of yield curve control in the toolbox and the criteria for ultimate policy normalization in Japan. Data will be a focus, but so too will any further commentary in this regard.
Then finally, to the UK no real data of note but we do get a steady stream of Bank of England MPC speakers, including Governor Bailey and Chief Economist Pill. With the growth versus inflation dilemma for monetary policy, perhaps the most complex in the UK the commentaries will be important barometers particularly set against a notable bank analyst this week, offering projections for 2% UK inflation by the autumn noted in the FT. To add to the complexity for the UK government negotiations with the EU over the Northern Ireland protocol will be important and potentially critical for Sunak. We are expecting something early next week. Negotiations with the public sector workers may be just as tricky as the government tries to restrain expenditure despite energy cap savings to the deficit ahead of the budget on the 15th of March. Where the chancellor will already have his hands full defending the corporate tax rise after public criticism from BT and AstraZeneca. That is not to mention that a burdening deficit that the government face in the polls lots to watch out for in the uk politically, economically, and monetarily.
Thank you, Neil. Still plenty to be keeping an eye on in the week ahead, which is great to hear. In the meantime, we have the weekend and in keeping with our tradition, perhaps you can just give us an insight as to what you're going to be keeping an eye on this weekend.
Yeah, thanks very much Matt. Plenty to look out for on the weekend. An almost full premiership schedule with Spurs versus Chelsea and the big relegation battles leads versus Southampton and Westham versus Nottingham Forest. The pick of the bunch. This gives way to the first football trophy of the season. Manchester United versus Newcastle in the EFL Cup final on Sunday afternoon. In cricket the second test New Zealand versus England from Wellington. Jimmy Anderson back at the top of the bowlings stats at the Spritely age of 40 still hope perhaps for us, Matthew, on the sporting front. There should be another very entertaining test but with the prospect of the return of F1 next weekend a pleasant background thought. This weekend is all about the rugby again for me. Ireland traveled to Italy, the early game on Saturday, England traveled to Wales after narrowly avoided strike action from the Wales team. And Scotland traveled to France on Sunday, all promising to be another cracker.
Fantastic. I'm very much looking forward to the rugby. Thank you once again for joining us and for outlining your thoughts on the week ahead. I very much look forward to catching up with you again next week.
Thank you for joining us for "The Long and Short of the Week Ahead". Further insights are available on our website eurizonsljcapital.com/insights. We look forward to you joining us again next week for more insights into macro-economic events and "The Long and Short of the Week Ahead".
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