A quieter week ahead for markets after the volatility of last week in the wake of the attacks on the Saudi oil facilities, the Fed rate cut, the surge in short term US money market rates, central bank meetings in the UK and Japan and the minutes from the Reserve Bank board meeting earlier this month which showed a rate cut is still high on the agenda in Australia.
This week will see the ripples continuing from the Saudi attacks, Donald Trump’s continuing undermining of a reduction in tensions in the trade war with China and updates on the health of business in economies in Asia, the US, Australia, and Europe, as well as the final estimate of US second-quarter GDP.
In Australia, the ‘rate cut looms’ stance seen in the RBA board meeting minutes will be tested tomorrow night with a major economic update from Governor Phil Lowe in a speech to be made in the NSW regional city of Armidale.
The speech is important – it will be delivered a week before the bank goes into the usual ‘cone of silence’ ahead of its monthly policy on October 1, so it will enable Dr. Lowe to set the policy debate and parameters as we start the final quarter of the year and ahead of a possible rate cut in November, which would be the third this year.
The only data of any note locally this week will be job vacancies for the three months to August – a fall is tipped.
Globally the release of the early business conditions surveys for September will be released today and the focus will be if there are any further sign of a stabilisation in the slowdown.
Among the trends to be watched will be the extent to which the trade downturn could be spilling over to services and employment, and also whether price pressures have continued to weaken.
The August PMIs from IHS Markit showed global growth slipping closer to a three-year low in August amid the fastest fall in goods exports since 2012. Price measures eased to three-year lows alongside the waning demand environment.
That’s a similar reading to what the monthly survey of Australian business conditions and confidence from the NAB.
The US business conditions survey will be watched closely to see if there is any sign of an improvement in manufacturing activity which continues to weaken.
Other US data will be house prices and consumer confidence (out Tuesday), new and pending homes sales (on Wednesday and Thursday) and durable goods orders on Friday, along with personal spending and a slight lift in core personal consumption deflator inflation to 1.8% year on year for August (also on Friday).
