by Kim | Nov 24, 2018
The macro review for w/c 19 November 2018 – Global growth remained in focus last week.
In the US, the question is whether the Fed will pause rate hikes. Prelim PMI’s for Nov indicated growth had slowed across manufacturing and services. The advance durable goods orders report for Oct had a large headline decline for new orders. This was partly because of large transport orders over the last few months, but there is some evidence that growth in ‘core’ orders have slowed somewhat.
Data on housing was a little mixed, but still shows that housing continues to slow. The housing market conditions index in fell relatively hard in Nov. But the Oct existing home sales recorded the first monthly increase in six months. New residential construction continues to slow.
The ECB minutes confirmed that current European data was weaker than had been expected. The Dec ECB meeting will be an important opportunity, with more data, to determine whether the current weakness is transitory or more persistent in nature.
Data out this week for Europe continues along the slowing theme. Prelim PMI’s highlight growth had slowed further in Nov – across both manufacturing and services in both core and periphery countries. Output growth in manufacturing is almost neutral and new orders declined. In Germany, both services and manufacturing growth continued to slow with manufacturing new orders and export orders declining.
The decline in German Q3 GDP was confirmed. The largest contributor was the decline in exports. But household consumption also contributed to the decline. The positive change in inventories offset the declines to a large degree.
The Japanese trade balance deteriorated in Oct. While exports grew at a faster rate (than in Sep), imports grew faster. CPI growth ex fresh food remained unchanged at 1%. Energy prices continue to impact CPI growth.
The Brexit agreement was approved at the EC meeting on 25 Nov. The UK Parliament is expected to vote on the deal on 12 Dec 2018.
There are more topics/data releases covered in this weeks review. Use the links in the contents page to navigate to different country sections. Download the review here (hit the back button on your browser to return to the site);
Weekly Macro Review 19Nov2018
UPDATED – Outlook for w/c 25 November 2018 – A very full week of events, treasury issuance, Fed, ECB, BoE speeches and data releases.
The week kicks off early with the special EC summit on 25 Nov to finalise and formalise the Brexit agreement. The draft agreement then needs to be approved by both sides and there is still much uncertainty regarding the direction of the Brexit agreement through the UK Parliament.
It’s going to be an extremely heavy week for treasury issuance – the US Treasury will auction and settle approx. $285b in US Treasury securities, raising approx. $80.8b in new money. The 4wk and 8wk bill announcements are TBC. Its also month end and $24.9b in treasury securities will mature on the Fed balance sheet of which $12.3b will be reinvested.
The G20 Leaders’ Summit commences at the end of the week with a full week of meetings leading up that event. Presidents Trump & Xi are expected to meet on the sidelines regarding trade. Recent reports/statements/comments (posturing) are setting a more adversarial tone leading up to the meeting.
In the US this week, there will be a relatively full agenda of Fed speeches, included Chairman Powell at the Economic Club in NY. As we move into the realm of ‘no forward guidance’ we’ll be looking for signalling on the future path of rates. FOMC minutes will also be released this week. Data releases of note include the second estimate for GDP, house price data and PCE price index data.
Although there is no formal announcement, expect some US headlines regarding retail sales/traffic results regarding US Black Friday/Cyber Monday.
Prelim Japanese Industrial production this week will be an important follow-up on recent poor results. The expectation is for higher industrial production in Oct.
Eurozone and Germany CPI data.
ECB Draghi and BoE Carney speeches on Monday.
Further detail and a calendar of key releases is provided in the full briefing document – download it here (hit the back button on your browser to return to the site);
Weekly Macro Brief 25Nov2018
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Mars Capital Partners | Nov 23, 2018
NB: I am travelling next week so the update is getting posted early in advance. Please note that the COT data will not be included as it doesn't get released until next week due to the Thanksgiving holiday. This week equities traded lower as expected to retest the October lows - while the Nasdaq Indices […]
by Kim | Nov 19, 2018
The macro review for w/c 12 November 2018 – Slower global growth was a key focus this week across several fronts.
Speeches by regional Fed Presidents and Fed Chairman Powell all acknowledged slower growth globally, although growth remains strong in the US. “Broad consensus” to keep increasing US rates in the near term – but how far and how fast was the question. Mentioned by several Fed Presidents that modest inflation pressure is keeping expectations of rate increases in check.
ECB President Draghi also addressed concerns about slower European growth as GDP growth slowed to 0.2% in Q3, German GDP declined in Q3, Euro area employment growth slowed and CPI growth accelerated. Whilst Draghi claimed some of this weakness was due to ‘one-off’ impacts, some threats remain. Uncertainties around the medium term outlook have increased and will be better placed at the Dec ECB rate meeting to make a full assessment of the risks to growth.
Japanese Q3 GDP also declined – led lower by public and private demand and negative contribution from net exports. More recent data suggests that there might some improvement.
A deal was reached on Brexit, but headwinds/uncertainty remain on whether the UK parliament will approve the deal. Some mixed data – retail sales declined for the second month in a row and the labour survey shows most recent quarter that employment growth remains lower and unemployment increased. CPI growth remained steady.
The USTR has now made formal requests and set dates for public hearings into the negotiating objectives for its trade negotiations with Japan, the UK and Europe.
There are more topics/data releases covered in this weeks review. Use the links in the contents page to navigate to different country sections. Download the review here (hit the back button on your browser to return to the site);
Weekly Macro Review 12Nov2018
The outlook for w/c 19 November 2018 – Despite more positive messages over the last few weeks, the tone of US-China discussions took a negative turn over the weekend at the APEC meeting. Whether this continues into the lead up to the G20 meeting, may pose some headline risk. Presidents Trump & Xi are expected to meet on the sidelines of the G20 meeting at the end of next week.
A lighter week for US treasury issuance with the US Treasury auctioning and settling approx. $148b in ST bills this week raising approx. $15b in new money. Next week will be month end and so far, its looking to be an extremely heavy week of issuance – with an estimated $295b in treasuries to be auctioned and settled, raising approx. $90.8b in new money.
It’s a short week in the US with the Thanksgiving Holiday on Thursday.
Given the focus on global growth, one of the more important releases later this week will be the prelim PMI’s for the US, Germany and the Eurozone for Nov.
For the US, housing data will be in focus along with Durable Goods data.
UK and Brexit – the special EC summit to finalise and formalise the Brexit agreement is scheduled for Sunday 25 Nov.
Further detail and a calendar of key releases is provided in the full briefing document – download it here (hit the back button on your browser to return to the site);
Weekly Macro Brief 19Nov2018
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Mars Capital Partners | Nov 19, 2018
Last week we got the impulsive decline we had been looking for into Fib support for US equities. From a big picture perspective we now have 5 waves down and 3 waves up terminating at 61.8% Fib resistance indicating a bigger picture change in trend to down. The question is whether the 3 wave rally […]
by Kim | Nov 12, 2018
The macro review for w/c 5 November 2018 – As expected, the FOMC kept rates on hold. There was little change to the accompanying statement. US data out this week confirmed the continued strength of economic activity. Growth in services activity remains close to near term highs and the services PMI grew at a faster pace. JOLTS data pulled back slightly, but job openings and hires remain close to all-time highs. Producer prices for final demand accelerated higher on the back of higher growth in energy, food and services prices.
US consumer credit growth was lower in the current month, but higher overall in the third quarter. Non-revolving credit drove overall consumer credit growth higher on the back of a pick up in both motor vehicle and student loan growth.
The EU rejected the UK compromise to resolve the Irish border backstop issue – both sides have not agreed on the implementation. There is still some possibility for negotiation, but its becoming unlikely that a deal will be ready in time to call a special EC meeting in Nov. Despite the uncertainty, UK data remains resilient. UK Q3 GDP grew at a faster pace driven by higher export growth and continued growth in household and government consumption. Some underlying signs of growth slowing throughout the quarter. This was also highlighted by the slower growth in the UK services PMI. New orders and some areas of consumer spending were weaker.
German industrial production was somewhat stronger than the manufacturing PMI had suggested – with production growing ahead of last year in the latest month. But slower growth/declines in new manufacturing orders, especially from overseas and the decline in manufacturing turnover were in line with the weaker momentum outlined in the Sep and Oct PMI’s.
Mixed data on Japan. Services PMI improved in Oct. The Japanese trade balance improved in the Sep month, but that was due to declining exports and mostly due to a larger slow down in imports. Slightly different on a quarterly basis as the trade surplus shifted to deficit in Q3 (Yen basis) – export growth slowed and imports grew at a faster rate. Machinery orders for Sep fell very hard – it’s also a volatile dataset. Will need to see how industrial output/activity responds in Oct and Nov, given the improvements in PMI’s.
The data on Aus housing continues to deteriorate. Overall lending for housing was down 14% from a year ago. The weekly auction clearance rates continue to fall. The RBA kept rates on hold as expected. Despite the likelihood of further falls in house prices, the RBA increased growth projections for 2018/19.
There are more topics/data releases covered in this weeks review. Use the links in the contents page to navigate to different country sections. Download the review here (hit the back button on your browser to return to the site);
Weekly Macro Review 05Nov2018
The outlook for w/c 12 November 2018 – A heavy week of treasury issuance with the US Treasury settling $247b in bill, note and bond auctions this week and raising $59.6 in new money. Its also mid-month and approx. $17b in Fed holdings of securities will roll off the Fed balance sheet. The date to watch is 15 Nov.
Several US FOMC member speeches this week including Chairman Powell.
US data this week; CPI, retail sales, industrial production and regional surveys. Looking for activity to confirm the continued path of rate increases.
Important European data is out this week, especially given the recent weaker data; CPI, Q3 GDP and industrial production. ECB President Draghi is also scheduled to speak. At the end of Dec (next month) the ECB is scheduled to finish net asset purchases (currently running at €15b). German Q3 GDP and CPI will also be released this week – providing some insight as to the impact of slower industrial production on the broader German economy.
With Brexit uncertainty continuing to increase and the pockets of slightly weaker UK data last week – this week will provide an important read on the resilience of the UK consumer with retail sales, the labour market and CPI.
The Australian labour market report for Oct will be out this week also – something to keep on the radar given the slow-down in housing.
Further detail and a calendar of key releases is provided in the full briefing document – download it here (hit the back button on your browser to return to the site);
Weekly Macro Brief 12Nov2018
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
