The Macro Outlook for w/c 6 September 2021

by Kim | Sep 6, 2021

The focus for the week ahead will be on central bank rate decisions. It will be a light data week – with US JOLTS for Jul and US PPI for Aug in focus.

This week, the RBA, BoC, and ECB will meet on monetary policy. The expectations are for no change to policy settings by the RBA. The Aus Q2 GDP came in stronger than expected and improving vaccination rates are providing some hope for the easing of restrictions. The ECB may indicate plans for QE tapering. The BoC is not expected to announce any change to policy at this stage despite recently disappointing data.

In the US, the federal pandemic benefits expire this week (5 Sept). These were introduced as a part of the CARES Act last year (PUA, PEUC, EB’s, FPUC, and MEUC) to support those impacted by Covid restrictions but not covered by the state unemployment benefits. Some states will still accept new PUA claims over the next few weeks while some states have already ceased extended benefits programs. As of 14 Aug, there were 5.4m people registered for PUA continuing claims, and 3.8m people for PEUC continuing claims.

Last week, US payrolls growth disappointed with a large miss of +235k new payrolls versus +728k expected. The Jul payrolls growth was revised higher to over +1m new payroll jobs. The lower growth in payrolls for Aug may be enough to postpone any taper announcements by the FOMC at the Sept meeting.

The US household labour market survey had some positive results. The decline in the number of unemployed persons was led by growth in employment rather than by a fall in participation. The participation rate remained unchanged (for 16yrs+), and the unemployment rate declined. The US ISM’s for Aug indicated a moderating pace of growth. Firms continued to experience supply chain disruptions that impacted output growth. Firms also noted some difficulty in filling positions.

The official Chinese National Bureau of Statistics PMI’s came in lower than expected (after recent regulatory crackdowns) with a notable contraction in non-manufacturing activity. The manufacturing PMI was at the 50-neutral level.

This week, the US Treasury will settle approx. $263bn in ST Bills with a net paydown of -$14bn (issuance < maturing bills).

Approx. $20bn in ST Bills will mature on the Fed balance sheet and will be rolled over.

The US Treasury will also auction $120bn in Notes and Bonds this week to settle next week.

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