Key events in developed markets next week

There are a few bits and pieces of interest from the US next week with personal income, spending and the Federal Reserve's favoured measure of inflation – the core personal consumer expenditure deflator – the highlights. Despite unemployment benefits being scaled back and the ending of stimulus cheques we still expect incomes to grow. This is because the strengthening economy is leading to employment gains and rising wages. This is a really important story that should lift consumer spending after the Covid resurgence speedbump that the economy appears to have hit in 3Q 2022. Inflation will remain elevated with upside risks to our forecast more likely than downside.

We will also be looking out for durable goods orders, which should get a decent lift from firm Boeing aircraft orders with the ISM report having indicated strength in orders from the rest of the economy. This should paint a rosy picture for the outlook for investment spending. We will then get the latest ISM report, which may show a slight moderation in growth relating to ongoing supply chain disruptions rather than to any downturn in demand.

Away from the data there are several Federal Reserve speakers slated to speak, including Jerome Powell. This will give a more detailed understanding of respective positions within the FOMC and we could hear more comments on what individual members are looking out for when they consider when to taper and when to eventually raise interest rates. Also on the agenda is an appearance from Treasury Secretary Janet Yellen (together with Chair Powell) as we head towards crunch time of the US debt ceiling issue and the passage through Congress (or not) of President Biden’s spending plans and infrastructure investment legislation.