Goldman Sachs Global Weekly Outlook: Focus on US CPI and Multiple Central Bank Decisions
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Goldman Sachs Global Weekly Outlook: Focus on US CPI and Multiple Central Bank Decisions
Reviews key global macroeconomic data and central bank meetings from August 10 to 16, highlighting that China's CPI and India's inflation expectations are above consensus, while US core retail sales are expected to be weaker.
- Central banks in Peru, Norway, India, Australia, Kenya, and Romania will announce interest rate decisions this week.
- Goldman Sachs forecasts the Central Reserve Bank of Peru to raise rates to 4.5%, higher than the market consensus of 4.25%.
- Forecasts China's July CPI at 0.9% year-on-year, slightly above the market consensus of 0.8%.
- Forecasts India's July CPI at 4.5% year-on-year, above the market consensus of 4.4%.
- Forecasts US July core retail sales at 0.2% month-on-month, below the market consensus of 0.3%.
- Key indicators to be released this week include US CPI, Eurozone GDP, and Brazil IPCA.
Report interpretation
Overview
This research report is the Goldman Sachs Economics team's weekly global macro outlook (August 10–16), systematically reviewing upcoming central bank interest rate decisions and key macroeconomic data releases for the week. The report highlights indicators where Goldman Sachs' forecasts differ from market consensus, including a higher expectation for the Peruvian central bank's rate hike, stronger-than-consensus forecasts for Chinese and Indian inflation data, and a weaker-than-consensus judgment on US core retail sales. The aim is to help investors identify potential data surprises in advance.
Core views
Central Bank Decisions: Six national central banks are holding monetary policy meetings this week. Goldman Sachs' forecast for the Central Reserve Bank of Peru significantly exceeds market consensus, predicting its benchmark rate will rise to 4.5% (consensus 4.25%, previous 4.25%). For the central banks of Norway (4.25%), India (5.25%), Australia (4.35%), Kenya (8.75%), and Romania (6.5%), Goldman Sachs' forecasts align with market consensus, remaining unchanged. Inflation Data: Goldman Sachs has stronger-than-consensus inflation forecasts for some emerging markets. Specifically, it forecasts China's July CPI to grow 0.9% year-on-year (consensus 0.8%, previous 1.0%); and India's July CPI to grow 4.5% year-on-year (consensus 4.4%, previous 4.38%). Additionally, US July CPI (overall YoY 3.35% vs. consensus 3.4%), Brazil IPCA inflation, and inflation data from Latin American countries such as Argentina and Colombia will be released this week. However, Goldman Sachs does not show significant deviations from consensus for these indicators. Consumption and Growth Data: Goldman Sachs' forecasts for US consumption data are weaker than market consensus, predicting July core retail sales to grow 0.2% month-on-month (consensus 0.3%, previous 0.5%), and overall retail sales to decline 0.1% month-on-month (consensus 0.1%). In terms of economic growth, the preliminary Q2 GDP for the Eurozone (0.4% quarter-on-quarter), Q2 GDP for the UK (0.4% quarter-on-quarter), and GDP data for Central and Eastern European countries such as Poland and Romania will be published this week. Goldman Sachs' forecasts for these indicators basically meet or slightly exceed consensus, without indicating obvious downside risks.
Analysis framework
The institution adopts an 'Event Calendar + Expectation Gap Screening' analytical framework. First, it aggregates the schedule for major global central bank meetings and macroeconomic data releases for the coming week. Then, it compares Goldman Sachs' internal forecasts with Bloomberg market consensus one by one. For indicators with large discrepancies, it further utilizes the standard deviation of historical data surprises (actual value minus consensus value) for normalization to calculate an 'Out-of-Consensus Score'. This quantifies and screens for the most noteworthy expectation gap signals. This method helps readers quickly focus on key nodes that may trigger market volatility amidst massive amounts of data.
Methodology notes
Out-of-Consensus Score
This metric is calculated by dividing the difference between the 'Goldman Sachs forecast and market consensus value' by the 'standard deviation of historical data surprises', thereby eliminating differences in measurement units and historical volatility across different indicators. The larger the absolute value of the score, the rarer the deviation from market consensus has been historically, and the higher the probability that the data release will trigger market repricing.
OIS Curve Implied Interest Rate Pricing
The research report extracts implied interest rates at specific maturities from the Overnight Index Swap (OIS) curve to infer market expectations for rate hikes/cuts at a central bank meeting. For example, comparing the spread of OIS contracts maturing on the Friday before and after a central bank meeting can isolate the market's priced-in magnitude for that meeting, which is a common benchmark for judging whether a central bank decision has been fully anticipated.
Key data
- Peru Central Bank Benchmark Rate Forecast4.5%Goldman Sachs forecast is higher than market consensus of 4.25%, previous 4.25%
- China July CPI YoY Forecast0.9%Goldman Sachs forecast is higher than market consensus of 0.8%, previous 1.0%
- India July CPI YoY Forecast4.5%Goldman Sachs forecast is higher than market consensus of 4.4%, previous 4.38%
- US July Core Retail Sales MoM Forecast0.2%Goldman Sachs forecast is lower than market consensus of 0.3%, previous 0.5%
- US July Overall CPI YoY Forecast3.35%Slightly lower than market consensus of 3.4%, previous 3.5%
Impact & implications
If this week's data validates Goldman Sachs' expectation gap judgments, it could have targeted impacts on related assets. For instance, if the Peruvian central bank raises rates to 4.5% as expected, it may boost the Peruvian Sol exchange rate and local short-end interest rates; if Chinese and Indian inflation data come in above expectations, it may reinforce expectations for both central banks to maintain tight policy or delay rate cuts; and if US core retail sales are as weak as Goldman Sachs predicts, it may increase market bets on Fed rate cuts within the year, putting downward pressure on the US dollar and Treasury yields. Conversely, if data reverts to consensus, the aforementioned trading logic may be invalidated.
Risks
- There is uncertainty regarding the release dates of emerging market data, with some indicators potentially being delayed.
- Market expectations may have already factored in some information, so actual volatility after data release may be smaller than the amplitude implied by the expectation gap itself.
What to watch
- Peru Central Bank interest rate decision on August 13 and wording of the policy statement.
- US CPI data on August 12 and core retail sales data on August 14.
- Combined China CPI and PPI data on August 9.
- India CPI data on August 12 and its impact on the central bank's subsequent path.