U.S. Markets closed

‘Super Mario’ Draghi Set to Ride Again: Global Economy Week

Simon Kennedy
1 / 4

‘Super Mario’ Draghi Set to Ride Again: Global Economy Week

(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. 

European Central Bank President Mario Draghi is looking to go out with a bang.

With less than two months before he steps down, Draghi will on Thursday convene policy makers for the penultimate time as the euro-area economy is squeezed by a stumbling Germany and the U.S.-China trade war. The betting of investors and more economists is he will burnish the reputation for energy that earned him the nickname of “Super Mario.”

More than 80% of economists surveyed by Bloomberg predict the ECB will announce its resuming bond buying despite some officials saying doing so would be premature. Forecasters also predict the deposit interest rate will be reduced by 10 basis points to a record-low minus 0.5%.

In easing, the ECB would be following the lead of the Federal Reserve, which is set to cut rates again this month after Chairman Jerome Powell said on Friday that the central bank was monitoring “significant risks” and would act as appropriate to extend the record expansion.

Here’s our weekly rundown of other key economic events and click here for more from Bloomberg Economics:

The U.S.

Fed officials aren’t talking ahead of their meeting the following week. Consumer inflation data on Thursday is unlikely to influence them much, but with economists predicting the headline figure rose 1.8% in August it may shape how much the central bank keeps easing beyond this month.

Firming Core CPI Bodes Well for Fed’s Inflation Mandate

Other data include Wednesday’s factory gate numbers and Friday’s retail and import prices. Investors will also be looking for insights into whether the U.S. and China are still adrift in their efforts to resolve the trade war.

For more, read Bloomberg Economics’ full Week Ahead for the U.S.

Asia

As the trade war intensifies, China reported Sunday morning that exports unexpectedly contracted in August with sales to the U.S. shrinking by 16% from a year earlier. Consumer and factory price numbers due Tuesday will underscore the dilemma for the People’s Bank of China as surging pork prices drive food prices higher while the return of industrial deflation highlights the need to underpin demand. Credit data will show further weakness in lending to companies, according to Bloomberg Economics.

Malaysia’s central bank is set to keep interest rates unchanged on Thursday, according to early forecasts by economists. In Japan, second quarter growth may be revised down on Monday amid weak investment.

For more, read Bloomberg Economics’ full Week Ahead for Asia

Europe, Africa and the Middle East

Thursday’s ECB meeting will dominate the week in the euro-area, but with the threat of a no-deal Brexit hanging over the U.K., monthly gross domestic product data for July will show if the British economy has continued contracting at the start of the third quarter, threatening a recession after a drop in the growth data for the prior three months. Bloomberg Economics predicts the report, released on Monday, will allay fears the economy is heading into recession. Poland is seen leaving its key interest rate unchanged.

Turkey’s central bank will probably reduce interest rates by another several hundred basis points on Thursday, prodded by a larger-than-expected deceleration in August inflation and by President Recep Tayyip Erdogan, who declared himself “allergic” to interest rates and all but ordered the new governor to cut. Bloomberg Economics predicts a reduction of 300 basis points. Russia will probably report that its economy expanded by 0.9% in the second quarter, leaving its central bank with more incentive to continue reducing borrowing costs.

For more, read Bloomberg Economics’ full Week Ahead for EMEA

Latin America

Mexico’s August inflation is expected on Monday to mark its slowest pace since 2016, potentially encouraging the central bank to cut its interest rate for a second straight month later in September. Investors will also be watching Brazil’s July retail sales for any sign of a consistent rebound in consumption amid aggressive monetary easing by the central bank.

Stronger Credit Boosts Sales of Autos, Construction Material

Meanwhile, Peruvian policy makers will debate on Thursday whether to lower borrowing costs again, following last month’s quarter-point cut, amid slowing inflation and declining growth expectations. Markets will continue to eye Argentina’s simmering financial woes.

For more, read Bloomberg Economics’ full Week Ahead for Latin America

(Adds China export data.)

To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net

To contact the editors responsible for this story: Stephanie Flanders at flanders@bloomberg.net, Zoe Schneeweiss

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.