Macro Review and Outlook for w/c 10 September 2018
Macro review for w/c 3 September 2018 – US growth momentum continues into Q3. Employment and non-farm payrolls continue to grow and the annual avg hourly earnings growth accelerated. ISM’s for August show business activity expanding at a faster rate, but PMI’s more subdued.
European data highlights slower momentum. GDP growth slowed in Q2 for the Euro area and growth is well below that of last year. Eurozone manufacturing PMI slowing with weaker gains in new export orders. Of note was the German data – manufacturing new orders, led by exports, and industrial production data is rolling over. German manufacturing PMI at lowest reading for 18 months.
Australia – RBA kept rates on hold, but two of the major banks increased mortgage lending rates anyway. Mortgage lending continues to decline. GDP growth in Q2 slowed versus Q1, but annual growth increased to +3.4%, above the RBA expectation for growth to “average around 3%”.
Trade disputes remained in focus as the US threatened a new round of tariffs of Chinese imports and hinted at the possibility of escalation with Japan.
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 03Sept2018
The outlook for w/c 10 September 2018 – The US Treasury will auction and settle approx. $161b in short term bills (4wk bill TBA), paying down approx. $22b in debt. The US Treasury will also auction $73b in longer term notes and bonds – to settle next week.
It’s possible that a fourth tranche of tariffs on Chinese imports will be announced by the US this week in a further escalation of the trade dispute with China. NAFTA negotiations between US and Canada will continue this week – an outcome may not be finalised until the end of the month.
Brexit negotiations are now ongoing between the UK and EU. Next week’s informal summit of EU leaders at Salzburg is shaping up as an important event for Brexit negotiations.
Key central bank decisions this week – ECB and BoE. Plus, several US Fed speeches – looking for further signalling on US rates/monetary policy.
Important data out this week; US monthly CPI and retail sales, UK monthly GDP.
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
MCP Market Update: September 10th, 2018 – Bearish Engulfing Week
Macro Review and Outlook for w/c 3 September 2018
Macro review w/c 27 August 2018 – A preliminary agreement on NAFTA was reached between the US and Mexico, with President Trump notifying Congress of his intention “to sign a trade agreement with Mexico – and Canada, if it is willing, 90 days from now”. Talks between US-Canada are yet to reach an agreement.
President Trump hinted that the third tranche of tariffs on Chinese imports may be implemented as early as this week.
Brexit negotiations did not yield any progress on the key issues of the withdrawal agreement. With deadlines looming, negotiations are now ongoing.
US; Q2 GDP growth was revised slightly higher – led by private investment, net exports and government expenditure. July data highlighting slightly slower momentum coming into Q3; July real personal income and consumption expenditure growth slower than in June, but continued acceleration in annual growth of PCE price indexes both headline and ex food & energy now both at or above the Fed’s 2% benchmark. Regional surveys provided insight into August performance – Richmond Fed manufacturing activity accelerating and Chicago PMI and Dallas Fed manufacturing expansions continuing at a constant pace.
Euro-area headline CPI growth still heavily influenced by higher energy price growth; headline +2%, but ex energy +1.3%. Similar for the provisional result on German CPI in July. The provisional German retail sales result in real terms declined in July.
Canadian Q2 GDP growth accelerated versus Q1 – led higher by household consumption and export growth.
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 3 September – There will be relatively lighter treasury supply this week. The US Treasury will auction and settle $145b in short term bills. The US Treasury will pay down approx. $18b in debt this week.
Trade – NAFTA negotiations resume between US and Canada with a meeting this week on Wednesday. It is hoped that a deal can be completed this week to finalise a NAFTA deal. Awaiting further detail for the next round of US-China negotiations. President Trump has hinted that the third tranche of tariffs on Chinese imports could go into effect as early as this week.
The UK parliament is back this coming week; key Brexit legislation is to be discussed amid negative comments from the EU on the Chequers plan and (ongoing) rumours of a leadership challenge. Negotiations between the UK and EU are now ongoing.
A relatively heavy data week – momentum of growth will be a key theme.
PMI’s for August will be released across major economies
US Non-farm Payrolls
Australian and Eurozone Q2 GDP
Rates decisions from RBA and BoC
Several Fed speeches this week – looking for signalling on rates and monetary policy
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
MCP Market Update: September 4th, 2018 – New ATH’s
