Central bank minutes of recent meetings and a decision on an interest rate move will headline the week’s data flow and events around the world.
The most important release for us in Australia will be the minutes of the RBA’s May meeting which cut rates. The Fed’s minutes of its meeting at the end of April will be out on Wednesday night as will the Bank of England, and the Bank of Japan announces its latest monetary policy decision at the end of the week.
Otherwise it will be a fairly quiet week.
In Australia the rumbling over the Federal budget will ease this week as attention turns elsewhere.
The Reserve Bank goes on another selling campaign, this time led by Deputy Governor Phil Lowe. In fact next week or so will be a busy one for the central bank and by the end of it we should have a good understanding of what it thought of the budget and the current state of the economy.
Dr Lowe speaks this morning in Sydney, the minutes of the bank’s May board meeting (where the cash rate was cut to 2%) are out tomorrow and Dr Lowe moderates a panel discussion at a finance and governance conference in Sydney on Wednesday.
On May 22, Assistant Governor Malcolm Edey addresses a cards and payments conference. Friday sees a meeting of the Payments Council – the RBA is getting tougher on some card and interchange fees.
On May 27, Dr Lowe steps out in public again in Sydney at a financial regulation conference, while two days later Assistant Governor Edey speaks at another finance conference, this one involving research.
There are few statistics of note this week – car sales for April are the most important and they are out later today.
Westpac and the Melbourne Institute delayed their monthly consumer sentiment survey until this week (as usual in May) to measure consumer reaction to last week’s Federal budget. It’s out midweek.
Watch also for the Federal government to finally make its mind up about an inquiry into iron ore sales – believe it or not a government committed to free enterprise (so it says) is responding to pressure from billionaire Twiggy Forrest’s moans about BHP Billiton and Rio Tinto when Twiggy is the problem.
In the corporate area a quiet week – James Hardie is due to release its March quarter and nine months figures mid week. The company’s comments on the Australian building industry should be of interest.
In the US, the minutes from the Fed’s last meeting are likely to confirm that while it’s not in a hurry to raise interest rates the decision will nevertheless be dependent on the flow of data regarding the state of the US economy. Last week we saw that data disappoint.
Fed chair Janet Yellen speaks on Friday night our time and once again her comments are likely to influence markets and sentiment.
On the data front the NAHB home builders’ index is out tonight, our time Monday, housing starts and permits (Tuesday night), existing home sales (Thursday night) and the Markit manufacturing conditions PMI (Friday night). CPI inflation (also Friday night) is expected to remain low and well under the Fed’s target of 2% a year.
That will underline the uncertainty of the timing of the Fed’s rate rise later this year, or in early 2016.
In the corporate area, the first quarter earnings season is almost ended, but one of the most important profit announcement will come from the huge Wal-Mart.
Analysts will be looking for several things – signs the company’s sales malaise is over, a solid rise in earnings, an update on an expensive bribery case in Mexico, and the company’s views on the health of retailing which seems to be under increasing pressure.
Other retailers reporting include Target, Aeropostale, Staples, L Brands, TJX Cos, Footlocker, Williams Sonoma, Best Buy, Sears, Dollar Tree, Home Depot and Lowes Co.
Other companies down to report include Hewlett Packard, Campbell Soup Co, Deere and Co (there could be bad news from rural US sales), CSC, Hormel (the Spam company), Salesforce, Lenovo, Lionsgate and Intuit.
In Europe, besides the Bank of England releasing its minutes midweek, the eurozone business conditions surveys are out on Thursday night and should show a small improvement after the dip in April.
In Asia, the Japanese GDP update mid week is the major release from that economy. The manufacturing survey for May is out on Thursday and The Bank of Japan meets Friday but is unlikely to make any changes to monetary policy.
In China, the HSBC/Markit flash manufacturing conditions survey on Thursday could show a modest improvement after weakening in April.
And watch for any reaction to the news that the government had ordered the country’s banks to continue funding and/or bail out local government projects said to be worth $US3.5 trillion, even if they are flat broke.
