Stocks in the US ended Friday largely unchanged in a mostly negative week on global bourses. However the action in long bonds and the US dollar, which both rose across the week to multi-month highs, are the big stories.
Those moves come off the back of a raft of earnings from big US corporate heavyweights, US September retail sales, Chinese GDP and retail sales data, along with New Zealand CPI and more Brexit worries, which are all big catalysts for markets this week across the globe.
Australia will be buffeted by these moves offshore, however the big event is Thursday’s jobs data.
Janet Yellen might have just signalled the next big central bank play. There’s a clear change in thinking across global markets in recent months that believes more than just low rates and quantitative easing is necessary to get global economies moving. Naturally thoughts turn to fiscal stimulus as a means of reflation. But as the Bank of Japan signalled recently, central banks might need to throw out the rule book in order to get the economy moving again.
In a speech on Friday, Fed chair Janet Yellen signalled she might agree with the BoJ – or that she’s at least signal she’s prepared to discard the central banker rule book. She said it might be worth “temporarily running a ‘high-pressure economy’, with robust aggregate demand and a tight labour market”. That implies less Fed hikes, but a steeper yield curve.
The bond market took the signal with the curve steepening and US 10-year treasuries closing at 1.79% – the highest weekly close since May.
Australian calendar – (courtesy NAB Economics, our enphasis)
The greatest market interest comes on Tuesday and Thursday with new RBA governor Philip Lowe speaking on Tuesday morning ahead of the Board Minutes later that morning.
Thursday brings what is likely to be a strong headline employment print and a steady 5.6% unemployment rate for September. The NAB Q3 Business Survey is out Thursday (watch it for capex and employment intentions).
Australian Labour Force – September The NAB’s underlying employment forecast, derived from leading indicators of employment demand, is a rise in employment of 15,000. But they also believe there will be a big impact from the ABS’s sample rotation process within the labour data, which will lead to the release of a bumper 30,000 print for September jobs growth.
International calendar (courtesy NAB Market Economics)
Global : The EU leaders Summit (Brussels) Thursday-Friday will create some newswire/Brexit interest as might chancellor Hammond’s testimony to the EU treasury committee on Wednesday. The main offshore data events include the NZ CPI on Tuesday (it often foretells risks to the AU CPI, out the week after), then Wednesday’s Chinese Q3 GDP along with the monthly retail/IP/fixed investment activity reports. The BoC is tipped to leave rates on hold as will the ECB.
US: Industrial production on Monday, CPI, housing and the Fed’s Beige Book on Wednesday, jobless claims, Philly Fed index, existing home sales, and the leading index on Thursday, with Fed speeches from Fischer on Monday, Williams on Wednesday, then Tarullo, and Williams again, on Friday. The last presidential debate is on Wednesday.
China: Wednesday’s super set of Q3 GDP and September retail sales, industrial production and fixed assets investment will be the main interest (typhoon activity and weak trade data suggests the monthly numbers have the potential to undershoot expectations). Also under focus will be property prices for September on Friday.
Japan: A quiet week. Industrial production on Monday is the main interest.
Euro: CPI Monday, ECB bank lending survey on Tuesday, then the ECB meeting Thursday.
UK: Rightmove house prices Monday, CPI and house prices Tuesday, labour market on Wednesday, retail sales on Thursday, then public finances on Friday.
Canada: BoC decision Wednesday (&MPS); no change universally expected.
NZ: Tuesday’s Q3 CPI takes centre stage and whether it’s a 10th shy of the RBNZ’s inflation track as the market expects it will be. Monday sees the PSI Services index, then the Dairy Auction Tuesday night, with Net Migration and Credit Card reports on Friday.
Here’s the NAB’s summary of all the key data and events.
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