US week ahead: CPI, retail sales and Powell - Danske Bank

Analysts at Danske Bank, believe it is likely core inflation stayed unchanged at 2.2% in October. They see expect retail sales to continue painting a robust picture of US consumers.

Key Quotes: 

“In the US, we estimate CPI data for October, due for release on Wednesday, rose 0.2% in October (unchanged at 2.2% y/y).”

“On Thursday, we are due to get retail sales control group data for October, which is a good indicator of private consumption. On Friday, manufacturing production data is scheduled for release. Optimism remains high, suggesting both retail sales control group and manufacturing production could rise further.”

“We will also listen to the upcoming speeches from Fed members next week, especially Jerome Powell’s speech at an event at the Dallas Fed on Thursday. However, we do not expect any news regarding rate hikes, as the Fed has been very clear on continuing the gradual rate increases without accelerating. Therefore, we still expect hikes in December, March and June, with the Fed funds rate reaching 3%, which is the Fed’s estimate of the neutral rate. After this, we expect it to be more stop and go, depending on how the economy is doing.”