The Experts

James
Craig James
Economy Expert
+ About Craig James
About Craig James

Craig James is CommSec’s Chief Economist.

On leaving school Craig James joined the (then) Rural Bank, whilst undertaking university studies. He received his Bachelor of Commerce (Economics) at University of NSW in 1984 and then a Master of Commerce (Economics) at the same university in 1988.

He remained at the Rural Bank, which became the State Bank over time and then Colonial, working in branches, Corporate, Planning and Economic Research.

He became chief economist of Colonial Group in September 1987, before becoming chief economist at CommSec in August 2000 with the Commonwealth takeover of Colonial.

In 2002 Craig had a sea-change, joining the Australian Financial Review. He had always wanted to pursue a role in journalism and enjoyed the role as an economic commentator and analysts, finding that he could pursue a journalistic-type role as well as doing more electronic media work at CommSec and rejoined the group in 2003.

On taking the reigns of chief economist at Colonial, Craig endeavoured to style their research in a “user-friendly” way – something that set their research apart and still does today. The approach has been successful in their media work and in promoting Colonial, and then CommSec, to the general public. CommSec is the most quoted economic group in the mainstream media.

CommSec economic reports are a bit different in that they devise tools such as the ‘Mums and Dads’ share index and the iPod index, and undertake research on the weather and demographic changes to show how they affect the economy.

Craig currently does around 2-3 regular TV crosses a day, ad hoc radio and newspaper interviews and writes regular commentaries as well as presenting to staff, clients and external organisations.

Outside work, Craig's main interests are athletics (cross country in winter), weight training, reading widely across a range of newspapers, magazines and electronic media, and trying to keep up with the children.

Australia: Mid-winter lull

Friday, July 19, 2019

The mid-winter lull in economic data continues in Australia. Skilled internet job vacancies figures are issued. The Commonwealth Bank releases its measure of economy-wide spending along with the ‘flash’ purchasing manager indexes. The gauges provide a health check on factory and services activity. Reserve Bank Governor Philip Lowe speaks at the annual Anika Foundation luncheon.

On Monday

The week kicks off on Monday when the Commonwealth Bank issues its Business Sales Index for June.

On Tuesday

On Tuesday the weekly series of consumer confidence will be released from Roy Morgan and ANZ. Also, on Tuesday, the Reserve Bank’s Assistant Governor Christopher Kent, Assistant Governor (Financial Markets), provides a speech “The Committed Liquidity Facility” at The Bloomberg Address, Sydney at 8.30am AEST.

On Wednesday

On Wednesday, the Commonwealth Bank’s ‘flash’ services and manufacturing gauges for July are issued. Manufacturing and services sector activity expanded in June. Also, on Wednesday, the Department of Employment releases the Internet Vacancy Index for June. In trend terms, the Internet Vacancy Index (IVI) fell by 0.7% - the fifth consecutive monthly decline - to 81.1 points in May. The index is 5.7 % lower than a year ago – the biggest annual decline since December 2013. 

On Thursday

On Thursday, Reserve Bank Governor rounds-out the week with his annual speech at the The Anika Foundation Luncheon in Sydney at 1.05pm AEST. And the Bureau of Statistics issues detailed labour market data for June.

Overseas: US economic growth data in focus

In the US, economic growth, housing and manufacturing data are amongst the highlights in the coming week. Durable goods orders data - a key measure of business investment - will also be closely scrutinised by economists for signs that companies haven’t frozen spending amid signs of a slowing US economy.

On Monday

The week begins on Monday in the US, when the influential Chicago Fed National Activity Index is issued.

On Tuesday

On Tuesday, the regular weekly reading on US chain store sales is scheduled, along with house prices, existing home sales and factory data from the Richmond Federal Reserve. Sales of previously owned homes rebounded in May to a 3-month high as all US regions gained amid lower mortgage rates and a still-supportive jobs market.

On Wednesday

On Wednesday, the weekly mortgage applications figures from the US Mortgage Bankers Association are due. New home sales declined sharply in May, led lower by a 35.9% plunge in sales in the West – the least affordable of the four major US regions. Also, on Wednesday, ‘flash’ IHS Markit purchasing managers’ manufacturing indexes are released for major developed economies, including the US, UK, Eurozone and Japan. Factory activity is contracting globally.

On Thursday

On Thursday, the weekly figures on new claims for US unemployment insurance are issued, along with durable goods orders, wholesale inventories and factory activity data from the Kansas City Federal Reserve. Durable goods are expected to lift by 0.9% in June after declining by 1.3% in May. It was the third fall in orders in four months, held down by Boeing’s struggles with its suspended 737 Max jet. Also, on Thursday, the goods trade balance is issued for June. Economists are forecasting a deficit of US$72.3 billion. The US merchandise-trade deficit widened in May to a five-month high amid a surge in imports following President Donald Trump’s decision to increase levies on US$200 billion worth of items from China. 

On Friday

On Friday, June quarter US economic (GDP) growth data is issued. Annual GDP growth is forecast to decelerate from 3.1% in the March quarter to 1.7% in the June quarter. US Federal Reserve Chair Jerome Powell recently said that “crosscurrents”, such as trade tensions and concerns about global growth, have been weighing on US economic activity and the outlook.

On Saturday

On Saturday in China, industrial profits data for June is scheduled.

US earnings season

The US profit reporting (earnings) season continues in the coming week. S&P 500 companies are expected to report a 3 per cent fall in second quarter earnings growth according to FactSet data.

Amongst companies reporting on Monday: Crane, Halliburton, Moelis, TD Ameritrade, Veritex, Whirlpool.

Tuesday: 3M, Allegheny Technologies, Biogen, Corning, Harley-Davidson, Kimberly-Clark, Lockheed Martin, McDonald’s, Snap, Verizon Communications, Xerox

Wednesday: Advanced Micro Devices, AllianceBernstein, AT&T, Boeing, Callaway Golf, Caterpillar, Ford, FreeportMcMoRan, Hilton, Legg Mason, Tesla, Visa.

Thursday: Alphabet, Amazon.com, American Airlines, Century Aluminium, Chipotle, ConcoPhillips, Expedia, Mattel.

Friday: Cabot Oil & Gas, Colgate-Palmolive, Goodyear, Moody’s, Phillips 66, Piper Jaffray, Twitter, Weyerhaeuser.

 

Good morning, Australia

Monday, July 15, 2019

How’dy USA

In US data, the producer price index (PPI) rose by 0.1% (consensus: flat) in June to 1.7% (consensus: 1.6%) in the year.

US share markets rose to record highs on Friday. The S&P 500 index closed above the 3,000 point level for the first time. Shares of Dow Inc. led the Dow Jones index higher, rising 4.0%. Shares of Caterpillar (+3.3%) and Intel (+2.7%) also led gains. JB Hunt Transport Services was the best-performing stock in the S&P 500, up by 5.9%. The Dow Jones closed up by almost 244 points or 0.9%. The S&P500 was up by 0.5% and the Nasdaq rose by 48 points or 0.6%. For the week, the Dow Jones added 1.5%, the S&P 500 rose 0.8% and the Nasdaq gained 1.0%.

Shorter-dated US treasuries rose (yields lower) on Friday. But treasury yields were largely unmoved by stronger-than expected producer price data as market expectations of an interest rate cut this month held firm. US 2-year yields fell by 1 point to near 1.85% and US 10-year yields were flat near 2.12%.

Major currencies were stronger against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from lows near US$1.1238 to highs near US$1.1273 and was near US$1.1269 in late US trade. The Aussie dollar rose from lows near US69.82 cents to highs near US70.24 cents and was near US70.14 cents in late US trade. The Japanese yen strengthened from near 108.46 yen per US dollar to JPY107.80 and was near JPY107.87 in late US trade.

Bonjour Europe

European share markets were little changed on Friday. The pan European STOXX600 ended trading flat but was down 0.8% over the week. The German Dax and the UK FTSE indexes were both down by just 0.1%. Daimler shares fell by 0.7% after the world's largest truck maker warned investors it expected to report a second quarter loss. In London trade, shares of Rio Tinto fell by 0.3%, but BHP shares lifted by 0.4%.

Hello World!

In China data, exports fell by 1.3%/yr. (consensus: -1.4%) and imports were down by 7.3%/yr. (consensus: -4.6%) in June. Chinese banks offered 1.66 trillion yuan (consensus: 1.7 trillion yuan) in net new loans in June, up from 1.18 trillion yuan in May.

Major currencies were stronger against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from lows near US$1.1238 to highs near US$1.1273 and was near US$1.1269 in late US trade. The Aussie dollar rose from lows near US69.82 cents to highs near US70.24 cents and was near US70.14 cents in late US trade. The Japanese yen strengthened from near 108.46 yen per US dollar to JPY107.80 and was near JPY107.87 in late US trade.

Global oil prices were little changed on Friday. Worries about a global crude surplus offset concerns over supply cuts in the US Gulf of Mexico due to Tropical Storm Barry. Global crude oil supply exceeded demand by 900,000 barrels a day in the first six months of 2019 according to the IEA. The Brent crude price rose by US20 cents or 0.3% to US$66.72 a barrel. The US Nymex price rose by US1 cent or 0.02% to US$60.21 a barrel. Over the week, Brent rose by 3.9% and the Nymex lifted 4.7%.

Base metal prices were mixed on the London Metal Exchange (LME) on Friday. Nickel (+2.6%) rose on concerns that Indonesia will resume an export ban on ore in 2022. Tin fell by 0.7%, while copper and aluminium were both down by 0.3%.

The gold futures price rose by US$5.50 an ounce or 0.4% to US$1,412.20 an ounce to be up 0.9% over the week. The spot gold price was trading near US$1,415 an ounce in late US trade. Iron ore fell by US70 cents or 0.6% to US$118.55 a tonne but was still up by 3.8% over the week.

G’day Australia

In China, June quarter economic (GDP) growth and June monthly activity data are all issued. In the US, the New York Empire State Manufacturing Index is scheduled.

 

Australia: Jobs data dominates

Friday, July 12, 2019

In the coming week there is little in the way of top-tier economic data. But the all-important June employment report will hog the headlines towards the end of the week. Before this, the minutes of the Reserve Bank’s July 2 Board meeting - where interest rates were cut for a second successive month - are issued on Tuesday.

On Tuesday

The week kicks off on Tuesday when the weekly series of consumer confidence will be released from Roy Morgan and ANZ. Consumers have been given a ‘shot in the arm’ by income tax and mortgage rate cuts, boosting their potential purchasing power.

Also, on Tuesday, the Reserve Bank Board’s July 2 monetary policy meeting minutes will be closely observed. At that meeting the cash rate was cut by 25 basis points to a record low 1%. It was the first back-to-back rate cut since mid2012. But Reserve Bank Governor Philip Lowe has since signalled that he may sit pat in the near term, choosing to “closely monitor how things evolve over the coming months”. While developments in the labour market remain the Bank’s key focus, the June quarter update on inflation looms large at month-end.

On Wednesday

On Wednesday, Westpac and the Melbourne Institute releases the Leading Index for June. The May reading of -0.1% implies a continuation of sub-trend economic growth into the second half of 2019.

On Thursday

On Thursday the NAB releases the June quarter survey of business confidence and conditions. Also, on Thursday, the employment report for June is issued. Both the unemployment and underemployment rates have ticked up in recent months. And leading indicators of jobs growth have weakened. The participation rate has hit record highs.

The Reserve Bank has cited spare capacity in the labour market for successive quarter per cent rate cuts in June and July. Commonwealth Bank economists have forecast 5,000 jobs to have been created in June with the unemployment rate stuck at 5.2% for a third consecutive month – above the Reserve Bank’s 4.5% “full employment” target.

Overseas: China economic growth data in focus

Chinese economic growth and activity data are amongst the highlights in the coming week. In the US, retail spending and the Federal Reserve’s Beige Book will be keenly observed ahead of the next interest rate decision.

On Monday

The week begins on Monday in China with economic growth data for the June quarter. The economy grew at a 6.4% annual pace in the December quarter, the slowest growth rate since March 2009. And growth is expected to slow even further to around 6.3% after the hike in US tariffs on US$200 billion worth of Chinese goods and services in May weighed heavily on China’s factories and the export sector. In addition, Chinese retail sales is tipped to have grown at an 8.5% annual pace in June with production up 5.3% and investment up 5.6%. Home prices are tipped to grow by around 11% over the year.

On Monday in the US, the influential New York Federal Reserve Empire State Manufacturing Index is issued.

On Tuesday

On Tuesday, the regular weekly reading on US chain store sales is due, along with retail sales, trade prices, industrial production, capacity utilisation, business inventories and homebuilder sentiment data. Retail spending is tipped to lift by 0.2% - the fourth successive monthly gain - after a solid 0.5% jump in May.

On Wednesday

On Wednesday, the weekly mortgage applications figures from the US Mortgage Bankers Association are due. The June readings on housing starts and building permits are issued. The US Federal Reserve’s Beige Book will be scrutinised for an expected improvement in the economic outlook across districts after trade tensions between the US and China receded at the G20 Summit in Osaka, Japan. But modest growth is expected later this year.

On Thursday

On Thursday, the weekly figures on new claims for US unemployment insurance are issued, along with factory data from the Philadelphia Federal Reserve. The Conference Board’s Leading Index is also issued. The index was unchanged in May – the first month without an increase since January.  

On Friday

On Friday, the University of Michigan releases its preliminary July estimate of consumer sentiment.

US earnings season

The US profit reporting (earnings) season gets into full swing in the coming week. S&P 500 companies are expected to report a 2.5% fall in second quarter earnings growth according to Bloomberg data.

On Monday

Amongst companies reporting on Monday: Charles Schwab, iHealthcare, JB Hunt Transport, QBioMed.

On Tuesday

Tuesday: BlackRock, Domino’s Pizza, Goldman Sachs, Johnson & Johnson, JPMorgan Chase, Morgan Stanley, Netflix, United Airlines, UnitedHealth, Wells Fargo.

On Wednesday

Wednesday: Alcoa, Bank of America, IBM, Kaiser Aluminium, Steel Dynamics, Texas Instruments, United Rentals.

On Thursday

Thursday: AMEX, Bank of New York Mellon, Microsoft, PayPal, Philip Morris, Skyworks Solutions, Snap-on, Travelers.

On Friday

Friday: Cleveland-Cliffs, E*Trade, eBay, Honeywell, Schlumberger, State Street.

 

Good morning, Australia

Monday, July 08, 2019

How’dy USA

In US data, non-farm payrolls rose by 224,000 jobs (consensus: 160,000) in June. The unemployment rate lifted from 3.6% to 3.7% (consensus: 3.6%). Average hourly earnings rose by 0.2% (consensus: 0.3%) to 3.1% over the year to June.

US share markets fell from record highs on Friday after the release of solid US jobs data. Traders sharply scaled-back their expectations of an interest rate cut of half a percentage point by the US central bank at its next policy meeting on July 30-31. The Dow Jones fell by almost 44 points or 0.2% after being down by 232 points earlier in the session. The S&P500 was also down by 0.2%. And the Nasdaq fell by 8 points or 0.1%. The Dow and S&P 500 both rose more than 1% over the week while the Nasdaq gained nearly 2%.

US treasuries fell (yields higher) on Friday due to a robust US jobs report. The US economy created more jobs than expected in June, suggesting that the US Federal Reserve will not aggressively cut interest rates later this month. US 2-year yields rose by 11 points to near 1.87% and US 10-year yields rose by 9 points to near 2.04%. Over the week US 2-year yields rose by 13 points and US 10-year yields rose by 4 points.

Bonjour Europe

European share markets fell on Friday. Disappointing German factory orders data pushed industrial shares down by 1.9%. The pan-European STOXX600 index was down 0.7%, capping weekly gains at 1.4%. Shares of Swedish tech giant Hexagon fell by 10.9% after the company warned of a drop in second-quarter sales due to global trade tensions. The German Dax fell by 0.5% and the UK FTSE was down by 0.7%. In London trade, shares of Rio Tinto fell by 3.8% and BHP shares fell by 2.8%.

Hello World!

Major currencies were weaker against the US dollar in US and European trade compared with the end of Asian trade. The Euro fell from near US$1.1280 to lows near US$1.1207 and was near US$1.1222 in late US trade. The Aussie dollar fell from highs near US70.22 cents to lows near US69.57 cents and was near US69.65 cents in late US trade. The Japanese yen eased from near 107.85 yen per US dollar to JPY108.62 and was near JPY108.45 in late US trade.

Global oil prices rose on Friday. US-Iranian tensions and an extension to output cuts by OPEC and its allies boosted prices. The Brent crude price rose by US93 cents or 1.5% to US$64.23 a barrel. And the US Nymex price rose by US17 cents or 0.3% to US$57.51 a barrel. But Brent recorded a 3.5% weekly loss and the Nymex shed 1.6% - the first weekly loss since mid-June.

Base metal prices were mixed on the London Metal Exchange (LME) on Friday. Zinc declined by 1.3% as spreads weakened, signalling increased supply. Lead (-0.4%) also fell, but nickel was up by 1.2%. Copper (-1.5%) posted its biggest weekly loss since May on demand concerns.

The gold futures price fell by US$20.80 an ounce or 1.5% to US$1,400.10 an ounce. The spot gold price was trading near US$1,399 an ounce in late US trade. Over the week gold fell by US$13.60 an ounce or 1%. Iron ore fell by US$8.05 or 6.6% to US$114.25 a tonne as the China Iron & Steel Association urged the Chinese government to maintain order in the steel market. Over the week iron ore fell by US$3.70 a tonne or 3.1%.

G’day Australia

In Australia, job advertisements data is issued. US consumer credit data is also due.

 

Australia: Post-election results

Friday, July 05, 2019

On Monday

The week kicks off on Monday with the release of the ANZ job advertisement series. The authors of the report are questioning whether the data is truly picking up hiring intentions. In 2019, more and more businesses are advertising for staff on their own websites as well as social media like LinkedIn. Job ads have been soft in recent months while employment has been solid. The Australian Bureau of Statistics (ABS) releases a survey of “Participation, Job Search and Mobility” also on Monday.

On Tuesday

On Tuesday the weekly series of consumer confidence will be released from Roy Morgan and ANZ. Also, on Tuesday, NAB releases the June survey of business confidence and conditions. In the election aftermath business confidence lifted. The question is whether businesses have got back to business by spending, investing and employing.

On Wednesday

On Wednesday, the ABS releases data on “Building Activity” as well as “Construction Work Done” for the March quarter. The building activity figures will include data on dwelling starts (commencements). Given that building approvals are softening, it is reasonable to expect further easing of project starts for houses and apartments.

On Thursday

On Thursday, the ABS releases May data on new lending commitments made by lenders to Aussie consumers and businesses. First home buyer activity is the highest in 6½ years in response to softer home prices and a greater choice of new properties on the market. But the data should also confirm the “strike” by housing investors ahead of the election.

Also, on Thursday, Reserve Bank Deputy Governor, Guy Debelle, delivers a speech via video conference to the at the FX Week USA conference in New York.

On Friday

On Friday, the Reserve Bank releases May data on credit and debit card lending. The data has been affected by ‘series breaks’ and re-classifications. But the financial regulator APRA has already released data showing reduced consumer appetite for credit card debt. The “Overseas Arrivals & Departures” data is also released on Friday.

Overseas: US and Chinese inflation data; Testimony by US Federal Reserve chair

The latest inflation readings from the US and China are released in the coming week. The Federal Reserve chair, Jerome Powell, delivers testimony to Congress.

On Sunday

The week begins on Sunday in China when the latest data on foreign exchange reserves is released.

On Monday

On Monday in the US, June data on consumer expectations is released together with the May reading of consumer credit (or lending). Credit is tipped to ease from US$17.5 billion to US$16 billion.

On Tuesday

On Tuesday, the regular weekly reading on chain store sales is due. But most focus will be on the small business survey from the National Federation of independent Business (NFIB) – the Business Optimism index. Also, on Tuesday the JOLTS series of job openings will be released. A modest lift from 7.449 million to 7.479 million is expected. The US job market is arguably in the best shape in 50 years.

On Wednesday

On Wednesday in the US, the weekly mortgage applications figures from the Mortgage Bankers Association are due and wholesale inventories. But more attention will be paid the minutes of the recent meeting of Federal Reserve policymakers – the Open Market Committee. Fed presidents have differing views on the need and timing of future interest rate cuts. The minutes will provide more information on the discussions that were had.

On Wednesday in China the data on consumer and producer prices is released. Higher food prices (especially pork) have been boosting consumer prices in recent months. In May, the annual rate of consumer prices rose from 2.5% to 2.7% – the highest rate since February 2018.

On Wednesday and Thursday, the Federal Reserve chair, Jerome Powell, testifies to Congress. The address to the House Financial Services Committee is on Wednesday with testimony to the Senate Banking Committee on Thursday. Rate cuts and central bank independence are the ‘hot’ topics.

On Thursday

On Thursday, the weekly figures on new claims for unemployment insurance are issued, along with data on the consumer price index (CPI) and the monthly budget statement. In June the core (excludes food and energy) measure of consumer prices probably rose 0.2% to stand 2% higher than a year ago – a result that won’t trouble the Fed.

On Thursday in China the June data on new vehicle sales is expected. Sales continue to soften – down 16.4% on a year ago in May.

On Friday

On Friday, the Producer Price Index (PPI) is released in the US. The core PPI is tipped to lift 0.2% in June to keep the annual rate at 2.3%

On Friday in China the June international trade data is expected. In May, exports were up 1.1% over the year while imports were down 8.5%. The trade surplus was US$41.66 billion.

 

Good morning, Australia

Monday, July 01, 2019

How’dy USA

The US and Chinese leaders have agreed to re-start trade talks and the US has agreed to halt additional tariffs for now.

In US data, personal income rose by 0.5% in May (forecast: +0.3%). Personal spending rose 0.4% as expected. The core personal consumption deflator (inflation measure) rose 0.2% as expected in May to be up 1.6% over the year as expected. The Chicago PMI fell from 54.2 to 49.7 in June (forecast 53.1). Consumer sentiment eased from 100.0 to 98.2 in June (forecast 98.0).

US share markets were firmer in heavy trade ahead of the G20 meeting. On Friday, the Dow Jones index rose by 73 points or 0.3%, finishing with the best June gain since 1938. The S&P500 index rose by almost 17 points or 0.6% - and posted the best June gain since 1955. And the Nasdaq rose by 38.5 points or 0.5%. Over the week the Dow fell 0.4%, while the S&P 500 and Nasdaq both lost 0.3%.

US treasuries were flat ahead of the G20 meeting in Japan. US 2-year yields were unchanged near 1.76% and US 10-year yields were flat near 2.00%. Over the week US 2-year yields fell by 4 points and US 10-year yields fell by 6.5 points.

Bonjour Europe

Major currencies were mixed against the US dollar in US and European trade compared with the end of Asian trade. The Euro fell from near US$1.1390 to US$1.1350 and was near US$1.1359 in late US trade. The Aussie dollar rose from US70.00 cents to US70.32 cents and was near US 70.25 cents in late US trade. The Japanese yen eased from 107.64 yen per US dollar to JPY108.28 to be near JPY108.17 in late US trade.

European share markets were firmer on Friday. The panEuropean STOXX600 index rose 0.7%. The German Dax rose by 1.0% and the UK FTSE gained 0.3%. In London trade, shares of Rio Tinto rose 1.1% and BHP shares were up 0.2%.

Global oil prices were mixed on Friday. The Brent crude price was unchanged at US$66.55 a barrel. But the US Nymex fell by US96 cents or 1.6% to US$58.47 a barrel. Over the week Brent rose 2.1% and Nymex rose by 1.8%. On the weekend, Russian President Vladimir Putin agreed with Saudi Crown Prince Mohammed Bin Salman to extend the current OPEC+ oil production cuts for another 6-9 months at the G20 Summit.

Base metal prices were mixed on the London Metal Exchange (LME) on Friday. Lead, nickel and tin fell by up to 0.7% while other metals rose up to 0.5%. Over the week metals rose 0.4-5.0% with copper up the least and nickel up the most.

The gold futures price rose by US$1.70 an ounce or 0.1% to US$1,413.70 an ounce. But the spot gold price was trading near US$1,409 an ounce in late US trade. Over the week gold rose by US$13.60 an ounce or 1% and gold rose 7.7% over June. Iron ore rose by US$1.60 or 1.4% to US$117.95 a tonne. Over the week iron ore rose by US$1.55 or 1.3%.

G’day Australia

In Australia, the manufacturing PMIs are released with home prices. In the US, the ISM manufacturing index is due.

 

Good morning, Australia

Friday, June 28, 2019

How’dy USA

In US data, the economy grew at a 3.1% annual rate in the March quarter, in line with forecasts. The core personal consumption deflator (inflation measure) grew at a 1.2% annual rate (forecast 1.0%). Pending home sales rose by 1.1% in May (forecast 1.0%). New claims for unemployment insurance rose by 10,000 in the past week to 227,000 (forecast 220,000). The Kansas Federal Reserve manufacturing index fell from +2 points to -3 points in June.

US share markets were mixed on Thursday. Investors were reluctant to push stocks too far ahead of the G20 meeting over the weekend, especially with mixed news about progress of US-China trade talks. Energy shares fell by 0.8% but the Philadelphia Semiconductor index rose by 1.5%. Shares in Ford rose 2.9% after the automaker announced it would cut 12,000 jobs in its Ford Europe division. The Dow Jones index closed down by 10 points or less than 0.1%. The S&P500 index rose by 11 points or 0.4%. But the Nasdaq rose by 58 points or 0.7%.

US treasuries were firmer (yields lower) on Thursday on continued uncertainty about whether a trade deal would be secured between China and the US. US Treasury sold $32 billion in seven-year notes to solid demand. US 2-year yields fell by 4 points to 1.74% and US 10-year yields fell by 4 points to 2.01%.

Bonjour Europe

Major currencies were stronger against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from US$1.1350 to US$1.1380 and was around US$1.1370 in late US trade. The Aussie dollar rose from US69.84 cents to US70.08 cents and was near the highs in late US trade. And the Japanese yen lifted from 108.15 yen per US dollar to JPY107.67 and was near JPY107.74 in late US trade.

Global oil prices were little-changed ahead of the G7 meeting this weekend and the meeting of OPEC nations at its allies on July 1. The Brent crude price rose by US6 cents to US$66.55 a barrel. And the US Nymex rose by US5 cents% to US$59.38 a barrel.

Base metal prices were mixed on the London Metal Exchange (LME) on Thursday. Zinc lost 1.6% and aluminium fell by 1.4%, copper edged 0.1% while nickel did best, up 1.9%.

The gold futures price fell by US$3.40 an ounce or 0.2% to US$1,412.00 an ounce. But the spot gold price was trading near US$1,408 an ounce in late US trade. Iron ore rose by US$1.60 or 1.4% to US$116.35 a tonne due to ongoing supply concerns.

G’day Australia

In Australia, the private sector credit and APRA banking data are due. In the US, personal income and spending figures are released with the Chicago personal managers index and consumer sentiment index. In China the official manufacturing and services gauges are released on Sunday.

 

Good morning, Australia

Monday, June 24, 2019

How’dy USA

In US economic data, existing home sales rose by 2.5% in May to a 5.34 million annual rate (forecast 5.25m). The Markit flash manufacturing index eased from 50.5 to 50.1 in June (forecast 50.4) with services down from 50.9 to 50.7 (forecast 51.0). US President Donald Trump announced over the weekend that the US will impose major new sanctions on Iran on Monday.

US share markets fell on Friday as traders booked profits at the end of the week. Traders watched relations between the US and China. Also, President Trump called off retaliatory strikes following Iran's downing of a US drone. The Dow Jones index fell by 34 points or 0.1% after being up 154 points in early trade. The S&P500 index fell by 4 points or 0.1% from record highs and the Nasdaq fell by almost 20 points or 0.2%. Over the week the Dow rose by 2.4%, the S&P 500 rose by 2.2% and the Nasdaq rose by 3%.

US treasuries were weaker on Friday (yields higher) as traders took profits and squared positions at the end of the week. In the coming week, US$113 billion of Treasuries will be auctioned. US 2- year yields rose by 4 points to 1.77% and US 10-year yields were up by 6 points to 2.06%. Over the week US 2-year yields fell by 7 points and US 10-year yields fell by 3 points.

Bonjour Europe

Major currencies were mixed against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from US$1.1280 to US$1.1375 and was around US$1.1365 in late US trade. The Aussie dollar held between US69 cents and US69.35 cents and was near US69.25 cents in late US trade. And the Japanese yen held between 107.10 yen per US dollar and JPY107.72 and was near JPY107.30 in late US trade.

Global oil prices rose by around 1% on Friday. Traders continue to focus on tensions between the US and Iran. Also, US gasoline futures rose 4% following a fire at a large refinery in Philadelphia - the biggest on the East Coast. The Brent crude price rose by US75 cents or 1.2% to US$65.20 a barrel. And the US Nymex rose by US36 cents or 0.6% to US$57.43 a barrel. Over the week Brent rose by 5.1% while Nymex rose by 9.4%.

Base metal prices fell by up to 1.7% on Friday with nickel down the most while copper fell by just 0.1%. Over the week copper rose by 2.8% and nickel rose by 1.9% but tin lost 1.5% and zinc lost 0.6%.

The gold futures price rose by US$3.20 an ounce or 0.2% to US$1,396.90 an ounce. The spot gold price was trading near US$1,399 an ounce in late US trade. Over the week gold rose by US$54.80 or 4.1%. Iron ore fell by US$1.15 or 1.0% to US$116.40 a tonne. Over the week iron ore rose by US$7.00 or 6.4%.

G’day Australia

In Australia, the Reserve Bank Governor participates in a panel discussion. In the US the Chicago Federal Reserve National Activity index is released with the Dallas Federal Reserve Manufacturing index.

 

Good morning, Australia

Friday, June 21, 2019

How’dy USA

In US economic data, the leading index was unchanged in May (forecast +0.1%). The Philadelphia Federal Reserve index fell from +16.6 points to +0.3 points in June (forecast +11). The current account deficit narrowed from US$143.9 billion to US$130.4bn in the March quarter (forecast US$125bn). New claims for unemployment insurance fell 6,000 in the latest week to 216,000 (forecast 220,000).

US share markets rose on Thursday with the broader S&P 500 index at all-time highs. Investors anticipated lower interest rates in coming months, boosting interest in equities. The energy sector also gained 2.2% in response to higher oil prices. Boosting tech shares was Oracle, its shares up 8.2% after flagging better-than-expected profits. Economic data was largely mixed. The Dow Jones index rose by 249 points or 0.9%. The S&P500 index lifted by almost 28 points or 1.0% and the Nasdaq rose by 61 points or 0.8%.

US treasuries were firmer (yields lower) on Thursday after the Federal Reserve laid the groundwork for rate cuts. Economic data showed a still tight job market while activity eased in the Philadelphia region. US 2-year yields fell by less than 1 point to 1.765% and US 10-year yields were lower by 1 point to 2.02%.

Bonjour Europe

European share markets were firmer on Thursday on expectations of easier monetary policy in the US. The pan-European STOXX600 index rose 0.4% to six-week highs. The German Dax rose by 0.4% to 9-month highs and the UK FTSE gained 0.3%. Swiss shares hit record highs on better-than-expected watch export data. In London trade, shares of Rio Tinto rose by 0.7% and BHP gained 2.0%.

Hello World!

Major currencies were firmer against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from US$1.1265 to US$1.1315 and was around US$1.1290 in late US trade. The Aussie dollar rose from US68.90 cents to near US69.35 cents and was near US69.20 cents in late US trade. And the Japanese yen lifted from 107.85 yen per US dollar to JPY107.20 and was near JPY107.30 in late US trade.

Global oil prices soared 4-5% on Thursday on news that a US drone was shot down in international waters near Iran. Also supporting commodity prices were expectations of a US rate cut in coming months. Lower interest rates should support oil demand. The Brent crude price rose by US$2.63 or 4.3% to US$64.45 a barrel. And the US Nymex rose by US$2.89 or 5.4% to US$56.65 a barrel.

Base metal prices were generally higher. Nickel rose 1.7% but lead was up the least, up 0.5%. Aluminium was flat but zinc fell by 1.0%.

The gold futures price rose by US$48.10 an ounce or 3.6% to US$1,396.90 an ounce. The spot gold price was trading near US$1,389 an ounce in late US trade. Iron ore rose by US$3.30 or 2.9% to US$117.55 a tonne.

G’day Australia

In Australia, CBA 'flash' purchasing managers survey is released. In the US data on existing home sales is released together with the 'flash' purchasing manager indexes. Federal Reserve presidents Brainard and Mester deliver speeches.

 

Good morning, Australia

Monday, June 17, 2019

How’dy USA

In US data, retail sales rose by 0.5% in May (forecast +0.6%) with ex-autos sales up 0.5% (forecast +0.3%), production up 0.4% (forecast +0.2%) and consumer sentiment in June was 97.9 (forecast 98.0).

US share markets eased on Friday. Reuters reported that shares of chipmaker, Broadcom, fell 5.6% after it cut its full-year revenue forecast by $2 billion, blaming the US-China trade conflict and export curbs on Huawei. The Dow Jones index closed lower by 17 points or 0.1%. The S&P500 index fell by almost 5 points or 0.2% and the Nasdaq lost 40 points or 0.5%. Over the week the Dow rose by 0.4%, the S&P 500 rose by 0.5% and the Nasdaq gained 0.7%.

US treasuries were mixed on Friday. US economic data generally beat forecasts, but Chinese production data missed market forecasts. US 2-year yields rose by 1 point to 1.84% and US 10-year yields fell by 1 point to 2.08%. Over the week US 2-year yields were flat but US 10-year yields rose by 1 point.

Bonjour Europe

European share markets were generally weaker on Friday. A sales warning by Broadcom weighed on chipmakers. And weaker Chinese production data reduced interest in trade-sensitive stocks. But safe-haven utilities rose by 0.5%. The pan-European STOXX600 index fell by 0.4%. The German Dax lost 0.6% and the UK FTSE fell by 0.3%. In London trade, shares of Rio Tinto fell by 0.7% and BHP lost 1%.

Hello World!

Major currencies were weaker against the US dollar in US and European trade compared with the end of Asian trade. The Euro fell from near US$1.1290 to near US$1.1200 and was around US$1.1205 in late US trade. The Aussie dollar fell from US69.05 cents to US68.60 cents and was near US68.70 cents in late US trade. And the Japanese yen eased from 108.15 yen per US dollar to JPY108.58 and was near JPY108.55 in late US trade.

Global oil prices rose on Friday. Attacks on two oil tankers in the Gulf of Oman have raised fears about some disruption to oil supplies from the Middle East. But the fears were not enough to prevent oil prices ending lower over the week. The Brent crude price rose by US70 cents or 1.1% to US$62.01 a barrel. And the US Nymex rose by US23 cents or 0.4% to US$51.51 a barrel. Over the week Brent fell by 2% and Nymex fell by 2.7%.

Base metal prices fell by up to 1.3% on Friday with aluminium down the most. But nickel went against the trend, up 0.3%. Over the week metals rose by up to 2.2%, led by nickel. But zinc bucked the trend, down 1.9%.

The gold futures price rose by US80 cents an ounce or 0.1% to $1,345.30 an ounce. The spot gold price was trading near US$1,341 an ounce in late US trade. Over the week gold fell by US80 cents or 0.1%. Iron ore fell by US80 cents or 0.7% to US$109.40 a tonne. Over the week iron ore rose by US$11.05 or 11.2%.

G’day Australia

In Australia no major economic data is expected. In the US, the Empire State manufacturing index is released with capital flows data and the NAHB housing market index.

 

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