Week Ahead: US PCE, SNB, Flash PMIs, Aussie and Tokyo CPI in Focus

MON: PBoC LPR, EZ Consumer Confidence Flash (Sep)
TUE: Riksbank Announcement, EZ/UK/US Flash PMIs (Sep)
WED: CNB Announcement, Australian CPI (Aug), German Ifo Survey (Sep)
THU: SNB Announcement, Banxico Announcement, BoJ Minutes, PBoC MLF, German GfK Consumer Sentiment (Oct), US Durable Goods (Aug), US GDP (Q2), US PCE (Q2)
FRI: Japanese Tokyo CPI (Sep), US PCE (Aug), US University of Michigan Final (Sep)
PBOC LPR/MLF (MON/THU): The is expected to leave its Loan Prime Rates unchanged for the fourth consecutive month, with the 1yr and 5yr rates seen steady at 3.00% and 3.50%, respectively, according to a Reuters survey of 20 respondents. The decision follows the PBoC keeping the seven-day reverse repo rate steady after the Fed’s recent 25bps cut, with officials previously signalling that any adjustment to LPRs would only follow changes in the policy rate. Desks note that recent activity data showed broad weakness, raising calls for additional stimulus, albeit market watches cited by Reuters suggest resilient exports and a stock market rally have eased immediate pressure for stimulus. That being said, some desks suggest a non-zero chance of no action. Macquarie suggests incremental measures remain likely to secure the government’s “around 5%” growth target, with a 10bp rate cut possible by year-end. Barclays, meanwhile, remains cautious on the size of fiscal support should the US-China trade truce hold.
RIKSBANK ANNOUNCEMENT (TUE): There is currently no newswire consensus ahead of the Riksbank decision, so taking a look at SEB, analysts expect the Bank to reduce its policy rate by 25bps to 1.75% (prev. 2.00%). Though it is worth highlighting that a SEB survey showed that the majority of respondents (64%) expect the Riksbank to keep rates steady in September, favouring a November cut instead. As a reminder, the Riksbank kept rates steady at the last meeting, as expected, and outlined that there was still some probability of a further interest rate cut this year, in line with the June forecast. Back to this meeting, inflation cooled a touch in August, with the core CPIF Y/Y metrics falling to 2.9% from 3.2%, and by more than the expected 3.1%.
SEB highlights that while the metrics remain elevated, there are hints that the Riksbank was correct to suggest the summer upticks were driven by temporary factors. Inflation aside, economic activity data continues to remain weak, but there are some signs of recovery; the latest unemployment rate cooled slightly from the prior to 8.7%, GDP was weak, and consumer confidence is beginning to show signs of recovery. Overall, SEB favours a 25bps cut, suggesting that the cooling inflation plays in favour of a cut, though Nordea focuses on elevated inflation and recovering economic activity data, as justification for a hold. Further out, focus will be on the Bank’s updated rate path. Currently, the MPR for Q4’25 points to some chance of a further rate cut. If delivered in September, more focus will be on the path pencilled in for Q1/Q2’2026 (currently 1.88%).
EZ FLASH PMI (TUE): Expectations are for September’s manufacturing PMI to rise to 51.0 from 50.7, services to hold steady at 50.5 and the composite to tick higher to 51.2 from 51.0. As a reminder, the prior release saw the composite PMI metric move further into expansionary territory with the pace of expansion ticking up to a one-year high. This time around, Oxford Economics notes that the data “should offer a more complete picture of what growth looked like during Q3”. The desk adds that it expects “a small improvement in the Eurozone numbers, although at current levels, the PMI still suggests a weak pace of GDP growth. We think manufacturing activity will be slightly stronger than services, although with both measures close to the 50-point threshold, the difference is minimal, and growth is weak in both sectors”. From a policy perspective, with the ECB standing pat on policy earlier this month and the Governing Council judging that inflation is consistent with its target over the medium term, the data would need to show a sizeable deterioration to put the prospect of further rate cuts back on the table. As it stands, markets price just 4bps of loosening by year-end.
UK FLASH PMI (TUE): Expectations are for September’s to decline to 53.9 from 54.2, manufacturing to slip to 46.9 from 47.0 and composite to slide to 53.0 from 53.5. As a reminder, the prior release saw the August composite metric extend further into expansionary territory thanks to a jump in the services component. The accompanying report noted the data indicated “that the pace of economic growth has continued to accelerate over the summer after a sluggish spring, the rate of expansion now at a one-year high