by Kim | Jun 11, 2018
Weekly Macro Review w/c 4th June 2018 – trade, trade negotiations and tariff threats continued to dominate the headlines, especially after the G7: –
On trade, the US is working across a number of fronts: –
- The form NAFTA will take may change with the US favouring agreements with individual nations. An agreement is not likely to be approved by the current US Congress.
- Outcomes from latest negotiations with China didn’t produce any breakthrough agreements and a day later, the US announced that a 25% tariff would go ahead on $50b of imports. List to be announced on 15 June.
- G7 summit produced little in the way of changes to current tariff threats.
- US-Japan trade talks to commence in July amid the US national security investigation into auto imports.
Other important themes and data released last week;
Australian GDP growth was strong +1% in the quarter. The RBA left rates on hold, citing inflation lower than its 2-3% target, household debt still high – lower rates and higher GDP growth to support household spending.
European growth rates were unchanged in the revised Q1 GDP release. Whilst Draghi’s speech did not go ahead, Praet’s speech provided an upbeat evaluation of the impact of ECB monetary policy actions, setting the scene for possible changes to ECB’s monetary policy accommodations. The ECB has previously flagged September 2018 for changes to its QE program.
UK data, especially Services PMI and Like for like Retail Sales, have rebounded somewhat in the latest month. But it’s worth noting the down-beat commentary in the Services PMI report. BoE’s Ramsden speech – looks most likely that the soft patch in UK data was due to temporary factors, data for Q2 better so far. Still looking for 3 rate rises over next 3 years, depending on data. Brexit remains a large risk and still potential for more downside in consumer spending.
US data showed continued growth with ongoing expansion in services PMI, narrowing of the trade deficit, factory orders ex-transports continuing to grow and JOLTs data was little changed remaining at near-term highs. Slowing consumer credit growth was a soft patch in the data.
More details are provided in the full report – download it here (then hit the ‘back’ button to return to the site);
Weekly Macro Review 04June2018
The focus of the upcoming week (w/c 11th June 2018) is US liquidity and central banks: –
US liquidity will be important this week;
- Approx $203b in treasury auctions will take place this week with approx $44b in new money to be raised. This is slightly higher than some of the heavier weeks we’ve seen recently.
- There will be no Fed holdings of Treasuries maturing this week – no reinvestments to off-set against new issuance.
- Key settlement dates 14 & 15 June and options expiration on 15 June also.
Central bank meetings and rates decisions;
- US FOMC – meeting 12-13 June; expected to raise rates to 1.75% – 2%.
- ECB rates decision 14 June; expected to start outlining changes to its monetary policy accommodations.
- SNB rates decision – not expecting any changes this meeting, it will likely take some direction from the course taken by the ECB.
- BoJ – not expecting any changes but will be looking for its reaction to the recent downturn in Japanese growth and CPI. New Deputy Governor Masazumi Wakatabe will be on board.
In the background this week;
- Key US data; retail sales and CPI
- Important UK data will be out this week to help answer whether softer Q1 data is persisting.
- Trade negotiations will be ongoing with a focus on China, NAFTA and European trade partners.
Download the full calendar for this week (then hit the back button to return the site);
Weekly Macro Brief 11June2018
Feedback is welcome. Please send any comments or questions to kim.mofardin@marscapitalpartners.net.
by Mars Capital Partners | Jun 6, 2018
Crude Oil may have formed a near term low with multiple momentum divergences, Fib support and impulsive rally off today's lows. Watching for a re-test of the red trend line break and then confluence of resistance in the 68.50-69.60 area. We are expecting near term US$ weakness so that will likely support CL. Dr Copper spiked […]
by Kim | Jun 4, 2018
Data from last week highlighted slower growth in Q1 across US, Europe, Canada; PMI’s improving in the US but the “soft patch” likely persisting in Europe; CPI’s higher impacted by energy costs.
US – GDP growth remains steady, though lower than recent growth, stronger employment growth than recent average, signs of continued wage growth and inflation remains close to the Fed’s target. PMI’s and regional surveys starting to post improvements after weakness earlier in the year, suggesting further growth. Trade/tariffs: uncertainty impacting sentiment and input prices – regional survey anecdotes, impact already seen in higher input prices, some supply issues emerging.
Europe – CPI growth higher but driven by a continued acceleration in energy prices, manufacturing PMI suggesting soft patch is persisting. Stronger retail growth in Germany, slowing Q1 GDP growth in France.
Canada – GDP growth slowing in Q1, rates on hold, BoC watching for impact on households and the housing market from higher mortgage rates and tighter lending.
Japan and China PMI’s – expansion in overall manufacturing activity remains mostly unchanged, no sign of an acceleration higher.
Several speeches from US Fed Governors during last week were of interest: –
Brainard: yield curve inversion less of a signal than in the past (Fed keeping rates low), curve movements to be interpreted within context of financial conditions. Yet Bullard’s speech earlier in the week highlighted the risk of allowing the yield curve to invert.
Bostic & Brainard: US treasury fiscal spending likely to impact short-medium term outlook for the economy, risks are to the upside for now, possible case for further rate increases. Not clear that fiscal spend and tax reform (the details yet to be written) will move the economy to a different, higher sustained level of output ie improve productivity. Both Bostic & Brainard see likelihood that positive impacts of fiscal spend will fade over the medium term.
For all the detail, download the full review (then hit the ‘back’ button to return to this post):
Weekly Macro Review 28May2018
Looking forward to this week, trade will be a key theme: –
- Trade:
- Further developments regarding the imposition of tariffs and retaliatory measures among NAFTA/European countries
- Outcomes from latest negotiations with China likely to drive sentiment
- G7 summit 8-9 June
- US, Chinese & German international trade data
- US liquidity: a lighter week with treasury bill auctions, but heavier supply next week approx. $39b in new money to be raised next week (amts TBC via Treasury announcements). No scheduled Fed speeches this week but with FOMC on board next week 13 June, expect some Fed speak
- Australia – RBA rates decision and Q1 GDP
- European growth – Q1 GDP (revised), ECB Draghi speech on Tuesday
- UK – Services PMI and Like for like Retail Sales, plus Monetary Policy Committee Member speeches all week
Download the full calendar for this week (then hit the ‘back’ button to return to this post):
Weekly Macro Brief 04June2018
Feedback is welcome. Please send any comments or questions to kim.mofardin@marscapitalpartners.net.
by Mars Capital Partners | Jun 4, 2018
US equity markets continue to look constructive with the Nasdaq now attempting to follow the Russell to new ATH's while the broader indices remain relatively weak. Bonds achieved our near term targets then sold off while the US$ may have topped near term. Crude continued its slide. If the bullish count is correct, the equity […]
