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
