It’s another big week for central banks this week – the Fed in the US, the Bank of England, the Bank of Japan all meet and release monetary policy decisions while the minutes of the June board meeting of the Reserve Bank – where the latest rate cut was made – will be out tomorrow.
And central bank monetary policy meetings are also expected from Brazil, Indonesia, Philippines, and Taiwan.
As well there’s an OPEC meeting late in the week and into the weekend, with other producers, led by Russia attending.
At the centre will be the 1.2 million barrels a day production cap and whether it will continue. The way prices are weakening, it certainly could (see the separate oil market story)
On top of the RBA minutes, Governor Phillip Lowe has a speech on the biggest question for the central bank at the moment – the health of the labour market, inflation and unemployment and how it all fits together.
That speech is on Thursday and follows a similar one from Luci Ellis the head of the RBA’s Economics Department last week.
As well there’s also the latest population report from the Australian Bureau of Statistics for the December quarter and 2018, The ABS also releases its latest quarterly data (for March) on national housing prices.
NSW and South Australia release their 208-19 budgets – watch for the collapse in house prices to hit the bottom line – especially in NSW and for weak payroll tax collections and GST distributions to have an impact as well.
There could also be a few more corporate confessions by June 30 balancing companies, while Coles has its big strategy relaunch this week from CEO, Steve Cain who last week chopped 450 jobs from head office in Melbourne.
In the US it will be the results of the Fed’s two-day meeting that will dominate the week in markets. Will the US central bank make its wait and watch monetary policy stance a bit more obvious by hinting that the next rate move could be down later this year?
The various forecasts – especially the so-called interest rate ‘dot plot’ (which shows where each fed member expects rates to be heading over the next couple of years) will be again watched keenly, along with the media conference from chair, Jay Powell.
Watch also for the usual ignorant tweets from Donald Trump on the subject of interest rates.
The AMP’s Chief Economist, Shane Oliver says that while a “rate cut is possible following Wednesday’s meeting .. the Fed is more likely to wait for a bit more clarity on the US/China trade war with a possible G20 meeting between Trump and Xi in late June and also wait to see whether the soft payroll report for May was an aberration or not.”
“However, with the rising trade threat to growth, some economic data weakening and inflation running below target it is likely to signal that it is open to cutting rates if needed, its inflation forecasts are likely to be revised down and the so-called dot plot of Fed officials interest rate expectations is likely to move lower.
“We anticipate two Fed rate cuts this year,” Dr. Oliver wrote at the weekend.
The late-month surveys of business conditions will be released in the US and globally on Friday. They produce early readings for the current month – in this case, June.
Dr. Oliver says the surveys for the US “will be watched closely to see if there is any improvement after recent declines which were partly due to trade-related uncertainty.”
As well there’s the month surveys on homebuilder conditions (Monday), housing starts (Tuesday) and existing home sales on Friday.
In Europe, the eurozone surveys on Friday are expected to show continuing signs of stabilisation but German figures will be watched closely.
The Bank of England on Thursday is expected to leave monetary policy on hold while the Brexit confusion remains unsorted.
The Bank of Japan is also expected to leave monetary policy on hold on Thursday but with a strong easing bias. Japanese inflation on Friday will again be weak. Trade data for May is also out on Wednesday.
