What mattered last week:
- After 3 straight weeks of gains, the S&P500 fell after an attack on Saudi oil infrastructure and a decision by a Chinese trade delegation to cancel a tour of U.S. farms.
- After the attack, crude oil initially rallied +15%, only to finish the week +6% as Saudi officials indicated that production would shortly be back to normal.
- The FOMC cut rates by 25bp to 1.75-2% as expected and as insurance against trade uncertainties.
- The Bank of England left rates unchanged as expected as did the Bank of Japan at their respective interest rate meetings.
- A retracement lower in yields last week helped gold finish the week +0.70% higher at ~U.S.$1516.
- Locally, dovish RBA minutes and a mixed jobs report has increased expectations of a rate cut. Currently the interest rate market has 20bp or is 80% priced for an October rate cut.
- As a result, the AUDUSD fell -1.5% to close the week near .6770.
- The ASX200 locked in 5 straight weeks of gains, closing ~6730
For the week ahead, the key events are:
Australia: RBA Governor Lowe speaks (Tuesday), private sector credit (Thursday).
- RBA Governor Lowe speech (Tuesday): The speech at the Armidale Business Chamber dinner on Tuesday at 7.55 pm AEST is titled “An Economic Update”.
New Zealand: Balance of trade, RBNZ interest rate meeting (Wednesday), ANZ Roy Morgan consumer confidence (Friday).
- RBNZ interest rate meeting (Wednesday): Following the surprise 50bp easing in August, the RBNZ is expected to leave the OCR on hold at 1.00% next Wednesday and leave the door open to further cuts before year end.
China: Industrial profits (Friday).
Japan: BoJ interest rate meeting minutes (Wednesday).
U.S.: Markit PMI’s (Monday) S&P Case Shiller home price index (Tuesday), CB consumer confidence (Wednesday), new home sales (Thursday), pending home sales, durable goods, personal income and spending, core PCE price index (Friday).
- CB Consumer Confidence (Wednesday): Consumer Confidence index fell 0.7 points in August to 135.1. The expectation is for another fall in September to 133.8, reflecting tariff concerns.
Canada: Average weekly earnings (Thursday).
Euro Area: German and EA Markit PMIs (Monday), German IFO survey (Tuesday).
- Euro area ‘flash’ PMIs (Mon): The Sep composite PMIs are likely to stabilise in September. The details will show the manufacturing sector remains in recession while the more domestically focused and larger services sector has remained resilient.
UK: Nationwide housing prices (Friday).
