The weekly macro review for w/c 12 October 2020 – The current US initial and continuing jobless claims are still missing up-to-date California figures. This is likely to updated in the following week. As of the 26 Sep, continuing claims across all programs still totaled more than 25m people.
US retail sales growth in Sep was stronger. The general theme reflected the ongoing shift in consumer behaviour from lockdowns and restricted activity (mainly home-based consumption) to more on-the-go consumption.
US consumer prices increased at a slightly faster pace in Sep. Underlying CPI growth was little changed. Some acceleration in core goods prices (used cars mainly) offset some slower growth in core services, including shelter.
Despite more positive Sep figures, sentiment at the start of Oct reflected increased concern for current weakening conditions. But there was an improvement in expectations for future conditions.
“Slowing employment growth, the resurgence in covid-19 infections, and the absence of additional federal relief payments prompted consumers to become more concerned about the current economic conditions.“
US industrial production was weaker in Sep, especially for manufacturing and utilities output. The two regional manufacturing surveys for Oct were quite strong though – suggesting some firming of activity.
Employment in Australia declined in Sep – led by a decline in full-time employment. This only partially offset the stronger employment growth from the prior month. Total unemployed persons increased. The increase in total unemployed persons would have been larger if not for the decline in participation. The underutilisation rate increased slightly to 18.3%. Aside from the four months between Apr and Jul 2020, the underutilization rate in Sep is the still the highest in the series history – highlighting the weakness and slack the remains in the labour market.
Chinese trade data reflected more moderate export growth in Sep. Import growth though was stronger for the month – this included a larger increase in imports from the US for the month.
There are more data releases covered in the review document. Use the links on the contents page to navigate to different country sections. Download the review here;
The macro outlook for w/c 19 October 2020 – Key highlights for the week ahead include the final US Presidential debate in the lead up to the US Presidential election, the EU-UK Brexit trade negotiations at an inflection point, central bank speeches, and the prelim Oct PMI’s.
There are now only two weeks until the US Presidential election. The focus this week will be the final Presidential debate (last week’s debate was cancelled) and the ongoing posturing around a stimulus bill.
Given the lack of progress on the trade deal negotiations, the UK-EU posturing ramped up in earnest leading into the EC summit last week. The EC summit had been a key milestone for deal outline, and this has now been missed. Talks are currently at a standstill and its not clear whether there will be face to face meetings this week.
There are several central bank speeches this week. The US Fed Chairman Powell, Vice Chair Clairda, Vice Chair Quarles and Governor Brainard will speak early in the week. Also speaking this week will be ECB President Lagarde and RBA’s Kent and Debelle.
Late this week, the Markit prelim PMI’s will provide a further update to the economic rebound as of Oct. We note the increase in trading restrictions throughout Europe and the UK, as virus cases start to rise again. The re-imposition of restrictions is likely to impact services activity in the coming months.
Other key data points this week include:
US – Housing will feature this week with permits, starts, existing home sales, and the housing conditions index. There will be a further read on regional manufacturing activity for Oct (last weeks’ regional results were positive for Oct).
China industrial production, retail sales, and fixed asset investment for Sep and Q3 GDP.
The RBA will release the minutes of the Oct meeting – looking for hints of further easing bias.
The US Fed will further increase purchases of MBS this week with $26bn in purchases planned for the week. Purchase of Treasuries will remain constant at $19.5bn.
US Treasury issuance will be lighter this week. The US Treasury will settle approx. $285bn in ST Bills this week with a net paydown of -$17bn.
This week, approx. $20bn in Bills will mature on the Fed balance sheet and will be rolled over.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
