Emerging Markets: What To Watch This Week - Emerging Market Views

Emerging Markets: What To Watch This Week

South Africa reports September money and credit data Monday. Both are expected to slow from August. Third quarter unemployment will be reported Tuesday and is expected at 27.4% vs. 27.2% in the second quarter. September budget data will also be reported that day, while trade data will be reported Wednesday. The next Next South African Reserve Bank (SARB) policy meeting is set for November 22. Much will depend on how the rand is trading.

Brazil reports September consolidated budget data Monday. The central government deficit was slightly better than expected, but still widened from August. COPOM meets Wednesday and is expected to keep rates steady at 6.5%. Markets now see little risk of a hike until 2019.

Mexico reports Q3 GDP Tuesday, which is expected to grow 2.4% y/y vs. 2.6% in Q2.  While the economy remains sluggish, rising inflation has forced the country’s central bank, Banxico to tilt more hawkish. The next policy meeting is November 15 and much will depend on how the peso is trading but consensus points to them likely to standing pat.

China reports official October manufacturing PMI Wednesday, which is expected at 50.6 vs. 50.8 in September. Caixin reports its China manufacturing PMI Thursday, which is expected to remain steady at 50. Policymakers are clearly concerned about the slowing economy, so further stimulus measures are likely if softness continues in the fourth quarter.

Turkey reports September trade Wednesday. The central bank also releases its quarterly inflation report that day.  The strong lira allowed the bank to stand pat last week even though inflation remains way above target.  Next policy meeting is December 13.  Much will depend on how the lira is trading but we think it’s likely to stand pat then.

Poland reports October CPI Wednesday, which is expected to rise 1.8% y/y vs. 1.9% in September.  If so, inflation would remain well below the 2.5% target and near the bottom of the 1.5-3.5% target range.

Chile reports September IP Wednesday, which is expected to contract -0.6% y/y vs. -1.8% in August.  Despite mixed real sector data, the central bank felt comfortable enough to start the tightening cycle last month with a 25 bp hike to 2.75%. Next policy meeting is December 4, and consensus points to a hold.

Thailand reports October CPI Thursday, which is expected to remain steady at 1.33% y/y.  If so, inflation would remain well below the 2.5% target and near the bottom of the 1-4% target range.  The next policy meeting is scheduled for November 14.

Indonesia reports October CPI Thursday, which rose 2.88% y/y in September. If so, inflation would remain well below the 3.5% target and near the bottom of the 2.5-4.5% target range. Next policy meeting is November 15, and we think it’s likely to stand pat then.

Colombia reports October CPI Saturday, which is expected to rise 3.35% y/y vs. 3.23% in September. If so, inflation would remain well above the 3% target but within the 2-4% target range. The central bank just kept rates steady on Friday at 4.25%. Next policy meeting is December 21, and it is likely to stand pat then before starting the tightening cycle in Q1.