AU Data
- Tue 12.30 Monetary Policy Meeting Minutes
- Tue 12.30 Housing Starts previous -4% expectation 2.2% q/q
- Wed 12.00 MI Leading Index previous 0.7%
- Wed Tentative RBA Annual Report
- Thu 12.30 RBA Monthly Bulletin
The headline release of the NAB Business Confidence (+18) survey jumped to its highest level since October 2003 and Business Conditions (+4) also gained on the back of hiring, sales and profits. However, the detail was not as encouraging with Forward Orders (-2), Employment (-11) and Capacity Utilisation (80.0%) all sliding backwards, indicating that prospects of a sustained recovery are not so assured. Further evidence of fragile demand came through Retail Sales (-1.0% m/m) that fell back for the 2nd straight month and Home Loans (-2.0% m/m), both of which have benefitted heavily from government stimulus packages in the past 6 months. As fiscal support is reined back through Q4 2009, the RBA will have to tread very carefully not to reverse improving business and consumer confidence by tightening monetary policy too sharply. RBA releases will be watched closely this week for clues as to when the first rate hike will occur, with November holding market favouritism for now.
NZ Data
- Mon 09.45 Retail Sales previous 0.1% expectation 0.6% m/m
- Mon 09.45 Core Retail Sales perevious -0.4% expectation 0.5% m/m
- Tue 09.45 Manufacturing Sales previous -0.9%
- Thu 09.30 Business NZ Manufacturing Index previous 49.7
The Q2 Overseas Trade Index (-9.0% q/q) declined for the 5th straight quarter and hit its lowest level since Q3 2006. The fall in the terms of trade was the result of decreases in export prices outstripping the decreases in import prices though Export Volumes (+7.0%) did manage to improve, primarily driven by higher international sales of dairy products. As expected, the RBNZ left rates unchanged at 2.5% and slightly softened its dovish tone but indicated that rates will remain at or near current levels until well into 2010. This week, the market will be looking to Retail Sales for continued improvement and the Manufacturing Index to break the 50 level to show expansion for the first time since April 2008.
US Data
- Tue 22.30 Core Retail Sales previous -0.6% expectation 0.4% m/m
- Tue 23.30 Producer Price Index previous -0.9% expectation 0.9% m/m
- Tue 23.30 Retail Sales previous -0.1% expectation 1.8% m/m
- Tue 23.30 Core PPI previous -0.1% expectation 0.1% m/m
- Tue 23.30 Empire State Manufacturing Index previous 12.1 expectation 15.2
- Wed 01.00 Business Inventories previous -1.1% expectation -0.7% m/m
- Wed 01.00 IBD/TIPP Economic Optimism previous 50.3 expectation 52.1
- Wed 23.30 Core CPI previous 0.1% expectation 0.1% m/m
- Wed 23.30 CPI previous 0.0% expectation 0.4% m/m
- Wed 23.30 Current Account previous -101B expectation -92b
- Thu 00.00 TIC Long-Term Purchases previous 90.7B expectation 60.3b
- Thu 00.15 Capacity Utilisation Rate previous 68.5% expectation 69.1%
- Thu 00.15 Industrial Production previous 0.5% expectation 0.7% m/m
- Thu 01.30 Crude Oil Inventories previous -5.9M
- Thu 04.00 NAHB Housing Market Index previous 18 expectation 19
- Thu 23.30 Building Permits previous 0.56M expectation 0.58m
- Thu 23.30 Unemployment Claims previous 550K expectation 554k
- Thu 23.30 Housing Starts previous 0.58M expectation 0.59m
- Fri 01.00 Philly Fed Manufacturing Index previous 4.2 expectation 8.1
The Fed’s Beige Book showed stable or improving economic activity in most of the 12 districts but, at best, only indicated that the recession was starting to bottom out. Most regions reported some improvement in residential real estate markets and manufacturing but house prices continue to fall and commercial property and labour markets remain weak. As a counter to recent improving consumer confidence data, Consumer Credit (-21.6b) fell by a record amount in July and extended the run to six straight monthly falls, which is the longest series of declines since 1991. Tighter lending conditions, stagnant incomes, job insecurity and falling household wealth are forcing citizens to rebuild personal balance sheets and prospects for a consumer led recover are still far from good; government intervention, as seen in the ‘cash for clunkers’ programme, merely shifts demand from one area to another and creates nothing. Despite all the uncertainty, UoM Consumer Sentiment (70.2) continues to show improvement but when this will translate into spending, which drives 70% of the US economy, is yet to be seen. A full diary this week will see markets focused on Retail Sales and housing data.
JP
N Data
- Mon 15.30 Revised Industrial Production previous 1.9% expectation 1.9% m/m
- Thu 10.50 BSI Manufacturing Index previous -13.2
- Thu 09.50 Tertiary Industry Activity previous 0.1% expectation -11.4
- Thu Tentative Monetary Policy Statement
- Thu Tentative Overnight Call Rate previous 0.10% expectation 0.10%
- Thu Tentative BOJ Press Conference
- Fri 16.00 BOJ Monthly Report
The Economy Watchers Index (41.7 from 44.4), a survey of barbers, taxi drivers and others who deal with retail customers, unexpectedly fell in August for the first time in eight months. Record unemployment and slumping wages are undermining the confidence of conservative Japanese consumers and highlights the enormous task the incoming government of the DPJ faces. Core Machinery Orders (-9.35 m/m) showed that big business is no more confident of a sustained global recovery and not surprisingly has little incentive to invest in new plant and machinery while 30% of the country’s manufacturing capacity remains idle. Final Q2 GDP was revised down from an annualised rate of 3.7% to 2.3% showing that Japan’s recovery from its deepest postwar recession is weaker than initial estimates; with benchmark companies such as Toyota announcing further closures of assembly lines and 36% cuts in capital spending this financial year it is becoming increasingly difficult to justify further equity market bullish sentiment.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
3.00% |
-25bps |
07/04/09 |
6th Oct |
| NZ (RBNZ) |
2.50% |
-50bps |
30/04/09 |
29th Oct |
| US (FED) |
0-0.25% |
-75bps |
16/12/08 |
23rd Sep |
| JPN (BOJ) |
0.10% |
-20bps |
19/12/08 |
17th Sep |