by Kim | Sep 4, 2018
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);
Weekly Macro Review 27Aug2018
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);
Weekly Macro Brief 3Sept2018
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Aug 27, 2018
Macro review w/c 20 Aug 2018 – From Jackson Hole, the US Fed Chairman reiterated his key principal that rate hikes that are too fast or too slow are undesirable. The path for interest rate increases will continue to be gradual and based on the incoming data. The data so far – good jobs and growth numbers and low inflation.
The FOMC minutes provided further insight, especially around yield curve inversion – and highlights the range of opinions that exist regarding how members view yield curve inversion. It’s possible the yield curve could invert in the short-term (already flat) – it’s not clear how the FOMC members will balance “good data” with possibly hiking into an inversion. The next FOMC meeting is 26 Sept and rates are expected to increase.
The RBA minutes continued to highlight that while the next move in rates is likely to be up, there was no strong case for an increase in the near-term.
US-Mexico trade talks appear to be making headway, especially on key issues regarding the easing of the sunset clause requirement. The Canadian Foreign Minister has stated that Canada will re-join NAFTA negotiations once the US-Mexico deal agreed.
US-China negotiations did not appear to produce any further progress on stalled talks.
Brexit talks last week also appeared to have made little headway. The EU and UK negotiators have now made negotiations ongoing to meet key deadlines. The UK parliament returns next week, and key trade and tax bills will be in focus.
Data across the board remains mostly good with a few pockets of weakness;
US flash PMI’s highlighted that services and manufacturing continued to grow, but at a slightly slower pace in August, Durable Goods new orders and shipments declined in July.
Eurozone flash PMI’s highlighted a consistent rate of growth in August – but with a gap between the faster growth of core nations and the slowing growth in the periphery nations.
Japan flash PMI for Manufacturing highlighted a slightly faster pace of expansion led by domestic demand. Export orders have declined for 3 months in a row. CPI increased in July and the core annual rate accelerated slightly.
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);
Weekly Macro Review 20Aug2018
The outlook for w/c 27 August 2018 – On liquidity, there is heavy treasury issuance this week. Key dates are 30 and 31 Aug. The US Treasury will auction and settle $267b in bills and coupons, raising approx. $46b in new money. The 4wk bill is yet to be announced. It’s month end and $20.9b of securities in the Fed SOMA will mature on 31 Aug – of that, $9b will be reinvested.
Trade – given previous timelines and current progress, it’s possible that a deal between US and Mexico on NAFTA could be announced this week. The restarting of US-China negotiations last week appears to have made little headway so far – awaiting announcement of further rounds of negotiations and/or escalations.
Brexit negotiations will now become ongoing between the UK and the EU. The UK parliament returns from summer recess next week.
Key data this week is focused on growth and CPI;
US – the second estimate of Q2 GDP and PCE and Core PCE prices for July
Eurozone – Final CPI for July and German prelim CPI for Aug
Canada – Q2 GDP
Further detail is provided in the full brief – download it here (hit the back button on your browser to return to the site);
Weekly Macro Brief 27Aug2018
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Aug 20, 2018
Macro review for w/c 13 August 2018 – Positive developments on trade this week. NAFTA talks between the US and Mexico continued possibly with some breakthroughs on new rules on auto trade and agricultural trade. Canada is yet to re-join talks. Talks are set to resume between the US and China later this month. The USTR process for the next tranche of Chinese tariffs continues with public hearings taking place this week.
Growth and spending data remained positive but CPI data points were weaker in the Eurozone and UK.
US data was somewhat positive. Retail sales were stronger in July, but growth was revised lower for June. Much slower growth in industrial production for the start of Q3. Regional data was mixed – a stronger Empire State Manufacturing Survey, but slower growth from the Philly Fed Business Outlook Survey.
Eurozone –flash GDP quarterly growth was unchanged from the previous quarter and the annual rate slowed slightly to +2.2%. Industrial production declined in June after a stronger result in May – declines were recorded across the larger Euro economies. CPI declined in July (with some larger declines across key Euro economies also) but accelerated higher on an annual basis. The annual rate is still influenced mostly by higher energy prices – annual CPI ex energy is growing at a more moderate +1.4%.
UK retail sales data was stronger with sales volume growth accelerating in July – June results revised higher also. CPI growth was zero for the month (goods components declined) and there was no change in the annual rate of 2.3%.
Brexit – no outcomes announced from the lower level talks of last week, little progress made on key points of the withdrawal agreement. An increasing focus on preparedness for Brexit with ‘no deal’ as the UK government will commence release of ‘no deal’ contingency plans starting this week.
The Zew Financial Market report (25 Jun – 9 Jul) highlights that economic expectation indices have fallen across most major economies, but the assessment of current conditions remains broadly positive.
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);
Weekly Macro Review 13Aug2018
The outlook for w/c 20 August 2018 – The big event for this week will be the Jackson Hole central banking conference/symposium commencing on 23 August.
Liquidity – A light week with the US Treasury possibly paying down $7b (4wk bill auction amount TBA).
Trade – could expect some further breakthroughs on NAFTA (US-Mexico) – both sides claiming a deal possible by the end of August. Awaiting further detail on the US-China trade talks announced last week. The second tranche of tariffs on Chinese imports goes into effect 23 August.
High-level Brexit talks recommence this week between the UK and EU – 21 August. The UK government will commence release of ‘no deal’ contingency plans this week.
A relatively quiet data week – preliminary August PMI’s will be released, US Durable Goods Orders, Japanese CPI, detailed German Q2 GDP and Canadian Retail Sales.
Further detail is provided in the full brief – download it here (hit the back button on your browser to return to the site);
Weekly Macro Brief 13Aug2018
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Aug 13, 2018
Macro Review for w/c 6 August 2018 – Starting with central bank meetings – the RBA and RBNZ both kept rates on hold last week. The BoJ summary of opinions report highlighted little differences of opinion on recent MP implementation changes. One opinion stood out – “Under the current policy, the possibility of the inflation rate increasing gradually toward 2 percent is low”.
US data continues to support Fed rate trajectory – CPI continued to grow with CPI ex fuel and food accelerating from 2.3% to 2.4% in June. Services growth (ex-energy services) remained at 3.1%. Consumer credit pulled back in the latest month but was higher overall in Q2 versus Q1. JOLTS, especially job openings, remain at historical highs.
Japan prelim Q2 GDP growth was stronger, driven higher in the quarter by private consumption. What stood out was the acceleration in the growth of compensation of employees in the quarter. Net exports detracted from growth on the back of slower export growth.
UK prelim Q2 GDP was also stronger. From the expenditure perspective, a large adjustment was applied to changes in inventories, making investment look stronger. Services continued to grow and contributed most to overall GDP growth. Construction reversed last quarters decline but was offset by a decline in total production (incl manufacturing).
On the trade front, the USTR confirmed that tariffs on the remaining $16b of the original $50b of Chinese imports would go into effect from 23 August 2018.
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);
Weekly Macro Review 06August2018
The outlook for w/c 13 August 2018 – A relatively heavy week of treasury issuance with the US Treasury raising approx. $51b in new money (4wk bill TBA). Its also mid-month and $23b in US Fed holdings of securities will mature – $10b of that will be reinvested.
Trade – NAFTA talks will continue between US and Mexico this week – both sides claiming a deal possible by the end of August.
Official Brexit negotiations recommence this week between the UK and EU.
Growth, retail sales and inflation data are in focus this week;
- US Retail Sales for July and a further read on industrial production and regional manufacturing.
- Eurozone Q2 prelim GDP, CPI for July, Industrial production and sentiment.
- Key UK data – Retail Sales and CPI for July.
- Australian Labour Force data for July and the Q2 Wage Price Index.
Further detail is provided in the full brief – download it here (hit the back button on your browser to return to the site);
Weekly Macro Brief 13Aug2018
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Aug 6, 2018
Macro Review for w/c 30 July 2018 – The US Fed kept rates on hold but affirmed its view of a ‘strong’ economy. This further increased the probability for rate increases in Sept and Dec 2018. The BoJ kept rates on hold and made adjustments to the implementation of monetary policy – widening the trading range of the 10yr yield, among other measures, in order to improve the sustainability of the framework. The BoE increased rates citing future inflation expectations.
US data – The acceleration in the growth of personal consumption and real disposable income data for June were highlights of the week. These helped to underpin stronger consumption growth in the Q2 GDP data. PCE price index was higher, around the Fed target rate. Growth in non-farm payrolls slipped and was below the current 12month average. Regional manufacturing and business surveys were stronger. The PMI’s for July show that overall private sector activity continues to grow, but without the acceleration seen in recent months.
Eurozone data was softer – GDP flash for Q2 highlighted slowing growth, headline CPI growth was influenced by energy prices, CPI ex energy coming in at 1.4%, Eurozone PMI’s for July highlighted weaker expansion in private sector activity, with slower growth in new orders across member states – the exception was Germany.
UK Services and Manufacturing PMI’s for the start of Q3 also highlighted slower growth across the private sector.
The PMI’s out of China highlighted slower growth, weaker demand and optimism reaching some of the lowest on record (esp Services). From the Chinese PMI report; “In July, the State Council, China’s cabinet, said the country will adopt a more proactive policy to support the economy in response to uncertainty abroad. The risk of an economic downturn has diminished.”
The US and China continued the tit-for-tat approach to tariffs.
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);
Weekly Macro Review 30July2018
The outlook for w/c 6 August 2018 – A quieter week on the liquidity front with the US Treasury auctioning and settling approx. $141b in ST bills raising approx. $16b in new money (4wk bill TBA). The US Treasury will also auction $78b in 3,10, 30yr treasury securities that will settle next week.
Central bank decisions this week from the RBA and the RBNZ.
Key data this week will be US CPI (July) and prelim Q2 GDP growth for the UK and Japan.
On the trade front. NAFTA negotiations have taken on a higher gear between US and Mexico. Mexico is keen to finalise an agreement, but Canada is yet to re-join the negotiations. There are US public hearing outcomes still due for various tariff proposals that may influence the direction on potential auto tariffs and US-China discussions.
Further detail is provided in the full brief – download it here (hit the back button on your browser to return to the site);
Weekly Macro Brief 06Aug2018
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
