The focus on the week ahead will be on US data – notably the CPI for Aug, retail sales, and consumer sentiment.
It will be a quiet week on the central bank front ahead of the FOMC meeting next week.
This week, the US CPI for Aug will be reported, and the pace of acceleration is expected to ease but growth will remain elevated. CPI growth in Aug is expected to be +5.3% (Jul prior +5.4%). US retail sales for Aug are expected to decline by -1% (-1.1% Jul) and the weaker consumer sentiment is expected to persist with a small gain from 70.3 in Aug to 72 in the first half of Sept. Also out this week will be several of the regional Fed surveys with an early view of Sept manufacturing momentum.
Data this week, together with the weaker growth in non-farm payrolls for Aug and the recent moderate downshift in growth noted in the Beige Book last week will be key inputs into the Fed decision next week.
In Aus, the RBA Governor Philip Lowe will speak this week. Last week, the RBA Board did not overturn its previous tapering decision despite the current Delta outbreak. QE purchases at the lower rate were extended through to at least Feb 2022 (rather than reviewed earlier). Restrictions remain in the two big states, albeit starting to ease, and vaccination rates are continuing to increase. The 70-80% (of 16yrs+) vaccination threshold should be reached by Oct/Nov for a broader ‘reopening’. The RBA noted that the recovery has only been “interrupted” at this stage, with the setback in growth expected to be temporary. Growth in Q4 is expected to rebound. The Aus labour market data out this week will be important, and employment is expected to decline by 70k (+2.2k in Jul). Participation is expected to contract notably, and the unemployment rate is expected to increase to 4.9% (from 4.5% in Jul).
The remainder of the Chinese data for Aug will be released this week – including industrial production, retail sales, FA investment, loans, and the house price index. Concerns remain over slowing growth in China (amid government crackdowns).
This week, the US Treasury will settle approx. $293bn in ST Bills, Notes, and Bonds this week, raising approx. $30bn in new money.
Approx. $28bn in ST Bills, Notes, and Bonds 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 pdf or scroll through the file below.
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
