Macro review for w/c 13 August 2018 – Positive developments on trade this week. NAFTA talks between the US and Mexico continued possibly with some breakthroughs on new rules on auto trade and agricultural trade. Canada is yet to re-join talks. Talks are set to resume between the US and China later this month. The USTR process for the next tranche of Chinese tariffs continues with public hearings taking place this week.
Growth and spending data remained positive but CPI data points were weaker in the Eurozone and UK.
US data was somewhat positive. Retail sales were stronger in July, but growth was revised lower for June. Much slower growth in industrial production for the start of Q3. Regional data was mixed – a stronger Empire State Manufacturing Survey, but slower growth from the Philly Fed Business Outlook Survey.
Eurozone –flash GDP quarterly growth was unchanged from the previous quarter and the annual rate slowed slightly to +2.2%. Industrial production declined in June after a stronger result in May – declines were recorded across the larger Euro economies. CPI declined in July (with some larger declines across key Euro economies also) but accelerated higher on an annual basis. The annual rate is still influenced mostly by higher energy prices – annual CPI ex energy is growing at a more moderate +1.4%.
UK retail sales data was stronger with sales volume growth accelerating in July – June results revised higher also. CPI growth was zero for the month (goods components declined) and there was no change in the annual rate of 2.3%.
Brexit – no outcomes announced from the lower level talks of last week, little progress made on key points of the withdrawal agreement. An increasing focus on preparedness for Brexit with ‘no deal’ as the UK government will commence release of ‘no deal’ contingency plans starting this week.
The Zew Financial Market report (25 Jun – 9 Jul) highlights that economic expectation indices have fallen across most major economies, but the assessment of current conditions remains broadly positive.
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);
The outlook for w/c 20 August 2018 – The big event for this week will be the Jackson Hole central banking conference/symposium commencing on 23 August.
Liquidity – A light week with the US Treasury possibly paying down $7b (4wk bill auction amount TBA).
Trade – could expect some further breakthroughs on NAFTA (US-Mexico) – both sides claiming a deal possible by the end of August. Awaiting further detail on the US-China trade talks announced last week. The second tranche of tariffs on Chinese imports goes into effect 23 August.
High-level Brexit talks recommence this week between the UK and EU – 21 August. The UK government will commence release of ‘no deal’ contingency plans this week.
A relatively quiet data week – preliminary August PMI’s will be released, US Durable Goods Orders, Japanese CPI, detailed German Q2 GDP and Canadian Retail Sales.
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
