Key facts
- The IMF and World Bank annual meetings will focus on growth, debt, and geopolitics.
- The IMF's updated World Economic Outlook is expected to reflect challenges from high energy prices and debt.
- US September consumer price index is forecast to rise 0.6% monthly, with core CPI up 0.2%.
- US producer price index is forecast to rise to 4.4% in September.
- Chinese exports are forecast to jump 25.3% year-on-year in September.
- US bank earnings are expected to rise up to 20% year-on-year.
Global financial markets are gearing up for a significant week, with the International Monetary Fund (IMF) and World Bank holding their annual meetings in Bangkok. The gatherings will focus on growth, debt, and geopolitics, with particular attention on the IMF's updated World Economic Outlook, which is expected to reflect the challenges posed by high energy costs, record public debt, and volatile bond markets. Geopolitical conflicts in the Middle East and Ukraine, as well as the regulation of artificial intelligence, are also on the agenda.
In the US, investors will closely watch key inflation data, including the September consumer price index (CPI) and producer price index (PPI), which will be released ahead of the Federal Reserve's next interest rate decision. The CPI is forecast to show a 0.6% monthly rise, with the core measure expected to increase by 0.2%. Retail sales data will also provide insights into consumer spending.
The third-quarter earnings season for US companies kicks off this week, with major banks like JPMorgan Chase, Goldman Sachs, Citigroup, Wells Fargo, Morgan Stanley, and Bank of America scheduled to report. Earnings are anticipated to rise up to 20% year-on-year, but the recent surge in Treasury yields to multi-decade highs has impacted bank shares, and investors will be looking for signs of how borrowing costs may affect dealmaking and lending.
China's economic data will offer clues on whether AI-related exports are compensating for weak domestic demand. Exports are forecast to have jumped 25.3% year-on-year in September, driven by global demand for AI goods, electric vehicles, and batteries, though a prolonged property slump continues to weigh on domestic consumption. Inflationary pressures related to the Iran war are also expected, with the producer price index forecast to rise to 4.4% and consumer inflation edging up to 1.1% in September.
The bond market remains a key focus, with strong demand at recent US and Japanese auctions indicating a return of investor interest amid surging government borrowing costs. However, the selloff in bonds shows little sign of abating, with US and French bond yields hitting fresh highs. The widening spread between French and German bond yields is also impacting the euro and European shares, with hedge funds reportedly increasing their presence in these crucial markets.