16 October 2023
- Russian President Vladimir Putin is set to meet with China’s Xi Jinping at the Belt and Road Forum in Beijing, continuing the deepening partnership between the two countries. Their “no limits” partnership, declared in 2022, has raised concerns in the United States, which considers both China and Russia major strategic competitors. Putin and Xi share a view of the West as declining, while China challenges U.S. supremacy. The optics of the Ukraine war have made big public deals between Russia and China less likely for now, but military and nuclear cooperation are expected to be on the agenda of their meeting. Russia also aims to secure a deal to sell more natural gas to China, with plans for the Power of Siberia-2 pipeline.
- Top U.S. officials have expressed concerns that the Israel-Hamas conflict could potentially escalate into a larger Middle East conflict. The fear includes possible actions by Lebanon’s Hezbollah or Iran’s involvement. The U.S. has deployed additional warships to the region as a deterrent, and U.S. officials are working on a new weapons package for Israel and Ukraine while also addressing the humanitarian crisis in Gaza. U.S. officials are concerned about the expansion of the Israel-Hamas conflict and the possible involvement of Lebanon’s Hezbollah and Iran. The U.S. has deployed additional warships to deter an escalation and is working on a new weapons package for Israel and Ukraine.
- President Vladimir Putin dismissed suggestions that the United States was preparing for a war against Russia and China as “nonsense” and warned that a war with Russia would be significantly different from the conflict in Ukraine. A U.S. Congressional panel recently recommended preparing for possible simultaneous conflicts with Moscow and Beijing by expanding conventional forces, strengthening alliances, and enhancing nuclear weapon modernization. Putin emphasised that Russia and China were not forming a military alliance, but the deepening partnership between these two major powers remains a concern in the West.
What to watch out for this week
- In the United States, market participants will be keeping a close eye on key speeches from various Federal Reserve officials next week to gauge the possible path of monetary policy in the coming months. At the same time, the third-quarter earnings season is well underway, with expected financial reports from major corporations such as Bank of America, Goldman Sachs, American Express, and others. On the economic data front, retail sales are expected to grow 0.2% in September, slowing slightly from August’s 0.6% increase.
In addition, particular attention is being paid to industrial production, with an expected growth of 0.1%, a decline from the 0.4% growth reported in the previous period. The housing sector will also be under scrutiny, with a focus on data on building permits, housing starts, and existing home sales. Other data to follow include business inventories, overall capital flows, the NAHB Housing Market Index, the NY Empire State Manufacturing Index, and the Philadelphia Fed Manufacturing Index. Beyond the U.S., Canada is set to release inflation data, retail trade figures, housing starts, and housing prices. Brazil is publishing retail trade figures.
- Looking at Europe, particularly in Germany, the Zew Economic Sentiment Index is expected to reach a six-month high in October. Furthermore, updated inflation data will be released for the Eurozone and Italy. The economic data calendar also includes statistics for the Euro Area’s balance of trade, current account, and construction output, along with Germany’s producer and wholesale prices, France’s business confidence, and Switzerland’s foreign trade figures.
- In the United Kingdom, the economic calender is packed with critical data, including key reports on inflation, unemployment, and retail sales. This will be supplemented by insights into Gfk consumer confidence and public sector net borrowing. The UK consumer price data for September is expected to point to a decline in annual inflation, reaching its lowest level since February 2022.
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