Macro Review for w/c 23 July 2018 – Positive news on trade last week. The US and EC agreed to at least halt the threat of tariffs while they begin talks to reduce trade barriers. High level NAFTA meetings also recommenced but with little detail/outcome.
The negotiation of the Brexit Withdrawal Agreement continued. Most of the agreement is in place but significant sticking points remain especially regarding frictionless trade borders. Key UK ministers, including PM May, have been meeting with EU members to try and build support. Meetings with the EC resume in mid-August.
The ECB kept rates on hold.
Core measures of Australian CPI growth continued to slow in Q2, edging down and out of the RBA target band of 2-3%. Its not likely that the RBA will start to cut rates based on slowing consumer prices at this stage.
US GDP growth didn’t disappoint with Q2 real GDP growth at +4.1%. Consumption, investment and net exports all contributed to higher growth in the quarter. Other measures of the US economy remained positive – growth in Durable Goods in June after two weaker months prior and the Chicago Fed National Activity Index for June returned to a higher than average rate of growth. Early July data was a little mixed, showing expansion in regional manufacturing surveys and the composite PMI, but expanding at a slower pace.
Other global preliminary Composite PMI’s for July were also mixed; slower expansion in the Eurozone (remaining near recent lows and downbeat commentary) and continued slower expansion in Japan. The German prelim composite PMI was stronger with expansion accelerating (led by manufacturing), continuing its rebound off recent lows.
More detail is provided in the full review of last week – download it here (hit the back button on your browser to return to the site);
Weekly Macro Review 23July2018
The outlook for w/c 30 July 2018 – It will be a big week ahead with several central bank interest rate decisions, important data releases and heavier US treasury supply.
Central bank decisions this week – BoJ, especially of interest given reports of possible changes to monetary policy accommodations, FOMC and BoE.
Liquidity – heavier supply of treasuries this week with the US Treasury auctioning and settling $273b in notes, bills and TIPS, raising approx. $43b in new money (4wk bill TBA). Its also month end, so the US Fed will see $30b in securities maturing in its SOMA portfolio on 31 July – only $7b will be reinvested.
This is also a heavy data week – US PCE and Outlays, US Non-Farm Payrolls, Eurozone CPI and Eurozone Q2 GDP are among the bigger reports.
PMI’s will also be released this week across the major economies.
Earnings continue and the last of the FAANG’s report this week – Apple Q2. Also, of interest is Caterpillar Q2.
Further detail is provided in the full brief – download it here (hit the back button on your browser to return to the site);
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
