CALENDAR HIGHLIGHTS

 

Monday: EZ Sentix Investor Confidence, UK GDP, Trade Balance, Industrial Production, Construction Output, US Consumer Credit, US Trade Representative Lighthizer visits Brussels for EU trade talks

Tuesday: CN Foreign Direct Investment, M2 Money Supply, New loans, UK Average Earnings, Claimant Count Rate, Unemployment Rate, 30-yr auction, GE ZEW Economic Sentiment, EU Employment Change, US NFIB Small Business Optimism, Wholesale Inventories (F), JOLTS Job Openings, API Crude Inventories

Wednesday: IT Industrial Production, Unemployment Rate, GE 30-yr auction, US PPI, Weekly DoE Inventories, Beige Book, 10-yr auction, Fed’s Brainard speaks, Apple Special event, EC President Juncker State of Union Address, Turkish Interest Rate Decision

Thursday: JN PPI, Core Machinery Orders, AU Employment Change, Unemployment Rate, GE/FR CPI (F), UK BoE Interest Rate Decision, EU ECB Interest Rate Decision & Press Conference, US CPI, Weekly Jobless, Federal Budget, 30-yr auction, Fed’s Quarles speaks

Friday: CN Fixed Asset Investment, Industrial Production, Retail Sales, Unemployment Rate, EU Trade Balance, UK BoE Carney speaks, US Retail Sales, Import Prices, Industrial Production, Capacity Utilisation, University of Michigan Sentiment (Pre-lim), Business Inventories

A busy week ahead with interest rate decisions from major central banks (BoE, ECB, Turkey) to Apple outlining its latest series of product enhancements due on Wednesday night. Despite the jam packed schedule, the main driver of cross asset class movement still remains highly dependent on developments pertaining to the on-going trade spat between the US and China. This comes after US President Donald Trump lambasted China on Friday stating that he is ready to tax all imports “at short notice”.

Moving forward it is worth remembering that US trade representative Robert Lighthizer is visiting Brussels today and with Europe being labelled abusive to treating the US unfairly in its trade practices, it would not be surprising to hear more confrontational commentary on the issue over the next 24-hrs.

US and them…

US non-farm payrolls was significant for the reason that US wage growth has now picked up pace to a level not seen in the best part of the last decade. The Y/Y rise to 2.9% further strengthens the case for the Fed to hike not only in September and December but likely further into 2019.

US wage data

There are of course large tail risks such as trade wars and emerging market contagion, but for now recent economic data continues to support the case that Stateside, America are making headway while the rest of the world muddles through.

Looking forward, there are further points of interest on the calendar as to ascertain inflation conditions and consumer sentiment as Thursday we see the release of US CPI followed by the retail sales report on Friday.

S&P CHART

For any single stock watchers, attention turns to Apple’s ‘Gather around’ event taking place Wednesday night. As per usual the cat if already out the bag and the headline announcement is likely to be an iPhone X with improved OLED display, alongside a new Series 4 watch and AirPods 2. More HERE for those interested.

One step forward, two steps back…

The FT reported on Sunday that the EU is preparing to give its Brexit negotiator new instructions to help close a deal with Britain. This would certainly come as relief to the embattled PM who once again was under fire from her former foreign secretary Boris Johnson who compared the current Chequers strategy to wrapping “a suicide vest around the British constitution”.

Although the market is somewhat desensitised to Mr Johnson’s often less than eloquent choice of words, separate reports suggest that up to 80 Conservative MP’s will vote against the PM’s plans if the party leader refuses to change course. My view is that this division is only likely to intensify ahead of the Tory conference at month-end.

CABLE CHART

The latest whirlwind in Westminster comes despite the UK economy growing at its fastest pace in almost a year between May and July, a narrative that market participants are unlikely to buy into given the contributing factors of persistently hot weather, a Royal wedding and the World Cup.

UK GDP

Supply disruptions looming…

Lots of news coverage on Iraq this weekend as security forces in Basra took measures to protect oil fields and foreign employees after protesters demanding jobs and basic services turned violent. In addition to this, blasts have been heard this morning at the HQ of the NOC (National Oil Corporation) in Tripoli, Libya where smoke was seen coming out of the main building with eye witnesses reporting armed gunmen on the scene.

The latest unrest in the two OPEC nations is something that warrants close monitoring in the week ahead and unless trade talks escalate sharply then the situations described above in addition to further weather patterns materialising in the Atlantic supports my baseline view that oil prices will remain supported in the short-term.

OIL CHART

ECB on auto-pilot…

On Thursday the ECB hold their latest interest rate decision and press conference. Although there are macro risks circling above (Italy fiscal policies, EM contagion, trade war on Europe) the path ahead has been laid out for the period ahead and this week’s meeting should do little to disrupt this pre-defined course.

The headline is likely to be centred around the confirmation of the pre-announced tapering of monthly QE purchases from EUR 30bln to EUR 15bln into year-end. If interested, you can read more HERE via our friends at ING economics.

EUR CHART

If you missed the live market briefing this morning you can review the session HERE.

Have a great week ahead.

Best,

Anthony

Photo by Kevin Ku on Unsplash

 

Anthony Cheung
Anthony is a leading market commentator with over a decade of experience accumulated as Head of Market Analysis at a leading news and analysis organisation, and now a Director of Amplify Trading.