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.

Good morning, Australia

Monday, October 14, 2019

How’dy USA

In US economic data, import prices rose 0.2% in September but were down 1.6% on the year. Export prices fell 0.2% to be also 1.6% below the previous year. Consumer sentiment rose from 93.2 to 96.0 in October (forecast 92.0).

US share markets were higher on Friday. President Trump said that the US and China had come to a substantial phase-1 trade deal, reaching agreement on intellectual property, financial services and big agricultural purchases. The Dow Jones rose by 320 points or 1.2%. The S&P500 index rose by 1.1% and the Nasdaq gained 106 points or 1.3%. Over the week the Dow rose by 0.9%, the S&P 500 rose 0.6% and the Nasdaq gained 0.9%.

US treasuries fell on Friday (yields higher). Investors cut exposure to defensive assets like government bonds, gold and the Japanese yen on news that the US and China had secured a partial trade deal. US 2-year yields rose by 8 points to 1.61% and US 10-year yields rose by 10 points to 1.75%. Over the week US 2-year yields rose by 22 points and US 10-year yields rose by 24 points.

Bonjour Europe

European share markets soared on Friday after US President Trump announced a partial trade deal with China. The panEuropean STOXX600 index rose by 2.3% and the German Dax rose by 2.9%. The UK FTSE rose by 0.8% after UK and Irish leaders expressed optimism about a Brexit deal. In London trade, shares of Rio Tinto rose by 2.6% and BHP rose by 1.4%.

Hello World!

Major currencies held tight ranges against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from near US$1.1000 to US$1.1060 and was around US$1.1040 in late US trade. The Aussie dollar rose from US67.70 cents to US68.10 cents and was near US67.85 cents in late US trade. The Japanese yen eased from 107.88 yen per US dollar to JPY108.60 and was near JPY108.40 in late US trade.

Global oil prices rose by more than 2% on Friday. Reuters noted: "Iranian media said a state-owned oil tanker was attacked in the Red Sea near Saudi Arabia, while optimism surrounding the US-China trade war lifted sentiment." But the number of oil rigs in operation in the US rose from 710 to 712 in the past week, capping gains in oil prices. The Brent crude price rose by US$1.41 or 2.4% to US$60.51 a barrel. And the US Nymex price rose by US$1.15 or 2.1% to US$54.70 a barrel. Over the week Brent rose by 3.7% and Nymex rose by 3.6%.

Base metal prices were generally firmer on the London Metal Exchange on Friday. Zinc rose 1.2% and lead rose 0.9%. But aluminium fell 1.7% and nickel lost 0.4%. Over the week zinc rose by 5.1% and copper rose by 2.8% but nickel fell by 0.9%.

The gold futures price fell by US$12.20 an ounce or 0.8% to US$1,488.70. The spot gold price was near US$1,489 an ounce in late US trade. Over the week gold fell by US$24.20 an ounce or 1.6%. Iron ore fell by US75 cents or 0.8% to US$92.65 a tonne. Over the week iron ore fell by US$1.25 or 1.3%.

G’day Australia

In Australia credit and debit card data is expected. In China, trade data is released. In the US the bond market is closed for Columbus Day.

 

Australia: Employment data in the spotlight

Friday, October 11, 2019

On Monday

The week kicks-off on Monday when the Reserve Bank releases the latest data on credit and debit card transactions. This data has become more comprehensive in recent months including figures on overseas card purchases and a breakup between personal and commercial card transactions. Interestingly, the number of credit and charge card accounts stood at a near 5-year low in July (lowest since November 2014), down from 15.77 million to 15.70 million in July.

On Tuesday

On Tuesday, minutes of the last Reserve Bank Board meeting are issued. This was the meeting where the Board decided to cut rates to all-time lows. Investors are keen to know whether further rate cuts can be expected this year. Also on Tuesday, the usual weekly measure of consumer confidence is issued by ANZ and Roy Morgan, CommBank releases a survey of household spending intentions and data on tourism arrivals and departures is scheduled. The Australian Bureau of Statistics (ABS) releases the tourism flow data. But the actual release is entitled Overseas Arrivals and Departures. So not only does the publication contain information on tourism arrivals and departures but also on longer-term migration flows as well.

On Thursday

On Thursday, the ABS releases the August estimates of employment and unemployment. The job market has taken on greater importance in Reserve Bank interest rate decisions. So in short, the data could prove pivotal. Although it is important to note that employment is a ‘lagging’ indicator – it reflects hiring and firing decisions made by firms as much as six months ago. Commonwealth Bank Group economists tip a 20,000 lift in jobs in September with the unemployment rate expected to remain steady at 5.3%. In August, employment rose for the 35th consecutive month, up by 34,700 jobs, with the jobless rate up from 5.2% to 5.3%.

Also on Thursday, Reserve Bank Deputy Governor Guy Debelle delivers a speech at the CFA Societies Australia Investment Conference in Sydney.

Overseas: Key Chinese data. US retail sales and production also in focus.

There is top shelf indicators for release in both China and the US in the coming week. Also keep a watch out for key US earnings results with Citigroup, JP Morgan, Morgan Stanley, Goldman Sachs and Wells Fargo all due to report on Tuesday.

On Monday

The week begins on Monday in China when September trade (exports and imports) data is released. The data should provide insights into the impact of US tariffs on the economy. Also data on vehicles sales may be released on Monday in China together with money and lending figures.

On Tuesday

On Tuesday in China, the September data on inflation is issued – producer and consumer prices. Deflation has returned to producer prices. While higher food prices (especially pork) are driving consumer prices higher. In the US on Tuesday, the regular weekly reading on US chain store sales is due with data on consumer inflation expectations and the influential Empire State Manufacturing index.

On Wednesday

On Wednesday in the US is ‘Super Tuesday’. The weekly reading on mortgage applications is issued as well as retail sales, capital flows, business inventories and the housing market sentiment index from the National Association of Home Builders (NAHB). And to top it off, the Federal Reserve releases its Beige Book – a qualitative survey of conditions across Federal Reserve district banks. Investors will look for clues on a potential rate cut on October 31.

Retail sales have been solid in recent months, underpinned by a strong job market and a gentle edging higher of consumer prices. In August, sales rose 0.4% to stand 4.1% higher over the year.

On Thursday

On Thursday in the US, the usual weekly data on claims for unemployment insurance (jobless claims) is released, together with housing starts, industrial production and the Philadelphia Federal Reserve manufacturing index. While production rose 0.6% in August it only stood 0.4% higher over the year. The US-China trade war has impacted manufacturing across the globe.

On Friday

On Friday in the US, the leading index is released. And the IMF/World Bank annual meetings commence. On Friday in China, the September quarter economic growth figures are released. In the year to June the economy grew by 6.2%. But all the indications point to a result near 6.0-6.1% in the September quarter. As well as the economic data, the September monthly data on retail sales, production and investment are also due on Friday in China.

 

Australia: Consumer and business surveys in focus

Friday, October 04, 2019

On Monday

The week kicks-off on Monday when AiGroup provides an update on construction activity.

On Tuesday

On Tuesday, weekly consumer sentiment data is issued by ANZ and Roy Morgan. Tax relief, the revival in property prices and positive superannuation returns are likely to support consumer spending. But tepid wages growth, elevated mortgage debt and rising unemployment are keeping consumer cautious. Also, on Tuesday, NAB provides an update on Aussie business confidence and conditions while ANZ issues its job advertisements series. Momentum in the business sector continues to weaken. Sluggish domestic demand, global trade uncertainty, rising input costs and subdued selling prices are weighing on business profitability and expansion plans. Job ads are important given the labour market focus of the RBA.

On Wednesday

On Wednesday, monthly consumer confidence data is scheduled from Westpac and the Melbourne Institute. Sentiment has been choppy, down by 1.7% in September after a 3.6% increase in August. Consumer views on unemployment and property expectations will be closely monitored. Also, on Wednesday, the Bureau of Statistics (ABS) issues building data for the June quarter. The slowdown in home building continues. And the amount of work entering the pipeline is declining, having peaked a year ago. The number of homes currently being built across Australia is the lowest level since December 2015.

On Thursday

On Thursday, lending finance data is released by the ABS for August. Housing finance approvals rebounded in July as lending conditions continued to improve. The total value of owner-occupier and investor loans rose by 5.1% and another 4% lift is expected in August. The size of home loans is lifting – presenting some challenges for Reserve Bank policymakers in the medium term with still-elevated household mortgage debt.

Overseas: US Federal Reserve and inflation data take centre stage

China returns from its National Day Golden week holiday period, but little data is scheduled. In the US, Federal Reserve Chair Jerome Powell speaks and the minutes of the Federal Open Market Committee (FOMC) September meeting are issued. And proposed US-China trade talks will be closely watched.

On Monday

The week begins on Monday in China when Caixin releases its private sector services activity gauge. Credit growth and money supply data are also scheduled for release during the week. On Monday in the US, consumer credit data is due. Total credit rose by US$23.3 billion in July, but most attention in the month was focused on the jump in credit card balances – which rose the most since 2017.

On Tuesday

On Tuesday, the regular weekly reading on US chain store sales is due together with producer prices data for September and the release of the NFIB small business activity gauge. Despite US-China trade uncertainty the NFIB index remains at elevated levels with activity still robust. Also, on Tuesday, US Federal Reserve Chair Jerome Powell is scheduled to speak at the annual meeting of the National Association for Business Economists in Denver.

On Wednesday

On Wednesday, the weekly reading on mortgage applications is issued as well as job openings and inventories data. The Job Openings and Labor Turnover (JOLTS) survey in July pointed to a loss of momentum in the US jobs market. Job vacancies eased to 5-month lows with the number of positions waiting to be filled falling by 31,000 to 7.22 million. The quits rate rose to 2.4% – the highest since April 2001 – suggesting that workers still remain confident about finding work with prospective employers.

Also, on Wednesday, the FOMC releases the minutes of its September 18 meeting where the federal funds rate was cut by 25 basis points to a target of 1.75 to 2.00%. The FOMC cited “the implications of global developments for the economic outlook as well as muted inflation pressures” as the primary reason for the cut. Commonwealth Bank Group economists still expect the FOMC to cut interest rates again in December.

On Thursday

Over Thursday and Friday high-level trade talks are due to be held between the US and China. The outlook for the global economy is dependent on a deal being secured. On Thursday, attention shifts to the release of consumer price data for August.  The annual growth rate of US core inflation rose to 2.4% in August. Tariffs drove goods prices higher, while medical care, shelter, apparel and used car prices all rose.

On Friday

On Friday, trade prices data is issued, completing the trifecta of inflation releases for September. The preliminary October update on consumer confidence from the University of Michigan is the other highlight to conclude the week.

 

Good morning, Australia

Monday, September 30, 2019

How’dy USA

In US economic data, personal income rose 0.4% as expected in August. Spending rose 0.1% (forecast +0.3%). The core personal consumption deflator (inflation measure) rose 0.1% to be up 1.8% over the year as expected. Durable goods orders rose 0.2% in August (forecast -1.0%). Consumer sentiment rose from 89.8 to 93.2 in September (forecast 92).

US share markets fell on Friday on reports that the White House was considering the delisting of Chinese companies from US stock exchanges. High level US-China trade talks will be held October 10- 11. Economic data was mixed. The Dow Jones fell by almost 71 points or 0.3%. The S&P500 index fell by 0.5% and the Nasdaq lost 91 points or 1.1%. Over the week the Dow lost 0.4%, the S&P 500 lost 1.0% and the Nasdaq fell by 2.2%.

US treasuries were stronger on Friday (yields lower). Investors mulled the latest news in the US-China trade war as well as mixed economic data. US 2-year yields fell by 3 points to 1.62% and US 10-year yields fell by 1 point to 1.67 per cent. Over the week, US 2- year yields fell by 9 points and US 10-year yields fell by 8 points.

Bonjour Europe

European share markets posted moderate gains on Friday, supported by mining stocks. Defensive sectors eased. The pan European STOXX600 index rose by 0.5% but fell over the week for the first time in six weeks. The German Dax lifted by 0.8% and the UK FTSE gained 1.0%. In London trade, shares of Rio Tinto rose by 2.0% and BHP gained 1.2%.

Hello World!

Major currencies were mixed against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from near US$1.0905 to US$1.0960 and was around US$1.0940 in late US trade. The Aussie dollar rose from near US67.45 cents to US67.80c and was near US67.65c in late US trade. The Aussie is near US67.55c this morning. The Japanese yen eased from 107.65 yen per US dollar to JPY108.17 and was near JPY107.92 in late US trade.

Global oil prices fell by around 1% on Friday on reports of a faster-than-expected recovery in Saudi production. The Brent crude price fell by US83 cents or 1.3% to US$61.91 a barrel. And the US Nymex price fell by US50 cents or 0.9% to US$58.09 a barrel. Over the week Brent fell by 3.7% and Nymex fell by 3.8%.

Base metal prices were mixed on the London Metal Exchange on Friday. Lead and tin fell by up to 1.3%. But other metals rose by up to 0.8% with copper up the most. Over the week metals fell by up to 3.7% with tin and aluminium down the most. But zinc rose 1.6%.

The gold futures price fell by US$8.80 or 0.6% to US$1,506.40 an ounce. The spot gold price was trading near US$1,496 an ounce in late US trade. Over the week gold fell by US$8.70 an ounce or 0.6%. Iron ore rose by US30 cents or 0.3% to US$91.50 a tonne. Over the week iron ore fell by US10 cents.

G’day Australia

In Australia, private sector credit data is released with the monthly inflation gauge. In China the official purchasing manager indexes are released. In the US, the Chicago purchasing managers index is released with the Dallas Federal Reserve manufacturing index.

 

Australia: Interest rate decision grabs centre-stage

Friday, September 27, 2019

On Monday

The week kicks-off on Monday when the Reserve Bank releases the data on private sector credit (effectively, ‘loans outstanding’). Lending is growing at the slowest pace for over five years. Also, on Monday, the Melbourne Institute releases its monthly inflation gauge.

On Tuesday

On Tuesday there is a logjam of data and events – so much so that it can be better described as ‘Super Tuesday’.  Certainly, the Reserve Bank Board hands down its interest rate decision. And we believe there is a solid chance the RBA will cut interest rates by another quarter of a per cent. The Reserve Bank Governor also delivers a speech on Tuesday evening in Melbourne. In terms of economic data, the CoreLogic Home Value index is issued. A solid 0.8% lift in prices is possible. Also, on Tuesday, AiGroup and Commonwealth Bank release their separate survey results of purchasing managers in the manufacturing sector. And the Bureau of Statistics (ABS) issues its August data on building approvals. In terms of the results: manufacturing continues to struggle, and the annual total of home building approvals has returned to longer-term averages.

On Thursday

On Thursday, another treasure-trove of data is released. The ABS issues the August international trade figures – exports and imports. Both AiGroup and Commonwealth Bank release their separate survey results of purchasing managers in the services sector. And the Federal Chamber of Automotive Industries issues the September data on new vehicle sales. There is evidence that luxury car sales are lifting, raising the potential for a broader lift in new vehicle purchase.

On Friday

And on Friday, the ABS issue the retail spending figures for August. Investors will be closely looking for evidence that Aussie taxpayers are starting to spend their tax offset payments. The Commonwealth Bank Group economists believe that spending is indeed starting to lift, tipping a 0.9% lift in retail spending in the month. It’s worth noting though that retail spending is only 30% of overall household spending. Also, on Friday, the Reserve Bank releases the Financial Stability Review – a half-yearly “assessment of the current condition of the financial system and potential risks to financial stability.” And Reserve Bank Assistant Governor, Luci Ellis, also delivers a speech in Geelong on Friday.

Overseas: Jobs, manufacturing and services

At the start of every month, surveys of purchasing managers dominate the statistical scoreboard. And the month of October is no exception. The other event to dominate attention is the US jobs report on Monday.

On Monday

The week begins on Monday when closely-watched regional activity gauges are released. The Chicago purchasing managers index is released with the Dallas Federal Reserve manufacturing index. In China on Monday, the National Bureau of Statistics releases the purchasing manager index (PMI) results covering manufacturing and services. The services gauge in August was 53.8 – well above the 50 line that separates expansion from contraction. Caixin also releases its PMI for the manufacturing sector.

On Tuesday

On Tuesday, it is the turn of the US to issue PMI results with both the Institute of Supply Management (ISM) and Markit releasing their gauges of activity in the manufacturing sector. Also, on Tuesday, the regular weekly reading on US chain store sales is due together with September sales data for new autos (or motor vehicles) and construction spending.

On Wednesday

On Wednesday in the US, the weekly reading on mortgage applications is issued as well as the ISM New York index and the ADP survey of private sector payrolls. The ADP report doesn’t always line up with the “official” jobs report, but investors still closely assess the data.

On Thursday

On Thursday, attention shifts to the purchasing manager surveys covering the services sector. Both ISM and Markit PMI results for services are issued in the US. The usual weekly data on claims for unemployment insurance (jobless claims) is also issued with factory orders and the Challenger series on job cuts.

On Friday

On Friday, the spotlight is well and truly on the US job market. Most investors are fixated on the rate of job growth (unlike here in Australia). And at this stage, economists are tipping a 166,000 lift in jobs or non-farm payrolls. But also, in focus are wages (average hourly earnings), hours worked and the jobless rate – not far off 50-year lows. Also, on Friday, trade data (exports and imports) for August is issued. The US continues to run a large trade deficit and the shortfall remains a preoccupation of US President Trump’s administration.

 

Good morning, Australia

Monday, September 23, 2019

How’dy USA

US share markets fell on Friday. US President Trump said his team was "making a lot of progress" with Chinese trade talks, but he wasn't interested in "a partial deal". Investors became pessimistic about the potential for a trade war resolution after a Chinese delegation cancelled planned visits to US farms. The Dow Jones fell by almost 160 points or 0.6% after trading in an 168 point range. The S&P500 index fell by 0.5% and the Nasdaq lost 65 points or 0.8%. Over the week the Dow lost 1.05%, the S&P 500 lost 0.5% and the Nasdaq fell by 0.7%.

US treasuries were stronger on Friday (yields lower) on investor risk aversion after Chinese officials cut their US trip short. US 2- year yields fell by 5 points to 1.69% and US 10-year yields fell by 5 points to 1.72 per cent. Over the week, US 2-year yields fell by 11 points and US 10-year yields fell by 18 points.

Bonjour Europe

European share markets posted moderate gains on Friday. Oil & gas shares rose by 1.2% with real estate shares up by 0.5%. The pan-European STOXX600 index rose by 0.3% - the fifth straight weekly gain. The German Dax lifted by 0.1% but the UK FTSE lost 0.2%. In London trade, shares of Rio Tinto fell by 0.4% and BHP eased by 0.2%.

Hello World!

Major currencies held in tight ranges against the US dollar in US and European trade compared with the end of Asian trade. The Euro fell from near US$1.1065 to US$1.0995 and was around US$1.1015 in late US trade. The Aussie dollar fell from near US68.10 cents to US67.60c and was near US67.75c in late US trade. The Japanese yen lifted from 108 yen per US dollar to JPY107.50 and was near JPY107.70 in late US trade.

Global oil prices fell slightly on Friday. Traders continued to watch developments in US-China trade talks. Supporting prices was data showing the number of oil rigs in operation in the US fell by 14 to a 2-year low of 719. Reuters reported: "A Saudi-led coalition on Friday launched a military operation north of Yemen's port city of Hodeidah while the United States worked with Middle East and European nations to build a coalition to deter Iranian threats." The Brent crude price fell by US12 cents or 0.2% to US$64.28 a barrel. And the US Nymex price fell by US4 cents or 0.1% to US$58.09 a barrel. Over the week Brent rose by 6.7% and Nymex rose by 5.9%.

Base metal prices were mixed on the London Metal Exchange on Friday. Zinc and aluminium lost 0.1% and copper rose 0.1%. But lead, nickel and tin rose 1.2-1.5%. Over the week zinc and copper both lost 3%. But tin gained 1.6%.

The gold futures price rose by US$8.90 or 0.6% to US$1,515.10 an ounce. The spot gold price was trading near US$1,517 an ounce in late US trade. Over the week gold rose by US$15.60 an ounce or 1.0%. Iron ore fell by US40 cents or 0.4% to US$91.60 a tonne. Over the week iron ore fell by US$7.50 a tonne or 7.6%.

G’day Australia

In Australia, the CBA 'flash' purchasing managers indexes (PMI) are issued. In the US, the Chicago Federal Reserve National Activity index is released with the 'flash' Markit PMI results. US Federal Reserve officials Williams, Daly and Bullard all speak.

 

Good morning, Australia

Monday, September 16, 2019

How’dy USA

In US economic data, retail sales rose 0.4% in August (forecast +0.2%). Excluding autos, sales were flat (forecast +0.1%). Export prices fell 0.6% in August (forecast -0.2%) and import prices fell 0.5% (forecast -0.4%). Consumer sentiment rose from 89.8 to 92.0 in September (forecast 90.9).

US share markets were mixed on Friday. Materials rose 1.1% but real estate fell 1.3%. Shares in Apple lost 1.9% after a major broker cut its price target on the stock. The Dow Jones rose by 37 points or 0.1% after trading in an 84 point range. The S&P500 index fell 0.1%; the Nasdaq lost 18 points or 0.2%. Over the week the Dow rose 1.6%, the S&P 500 rose 0.95% and the Nasdaq gained 0.9%.

US treasuries were weaker again on Friday (yields higher). Investors perceived an easing of US-China trade tensions. And retail sales rose by more than expected in August. US 2-year yields rose by 8 points to 1.802% and US 10-year yields rose by 11 points to 1.899 per cent. Over the week, US 2-year yields rose by 27 points and US 10-year yields rose by 35 points. It was the largest weekly gain for 10-year yields in 6 years and the biggest weekly gain in 2- year yields in a decade.

Bonjour Europe

European share markets posted moderate gains on Friday. The US and China made trade concessions to each other. Banks rose by 3%, miners rose 2.7%, autos rose 1.3% but the defensive food and beverages sector fell 2.1%. The pan-European STOXX600 index rose by 0.3%, the German Dax lifted 0.5% and UK FTSE gained 0.3%. In London trade, shares of Rio Tinto rose by 2.2% and BHP lifted by 1.8%.

Hello World!

Major currencies held in tight ranges against the US dollar in US and European trade compared with the end of Asian trade. The Euro held between US$1.1060 and US$1.1110 and was around US$1.1070 in late US trade. The Aussie dollar held between US68.65 cents and US68.90c and was near US68.75c in late US trade. The Japanese yen broadly held between 107.90 yen per US dollar and JPY108.15 and was near JPY108.05 in late US trade.

Global oil prices fell by around 0.4% on Friday. Concerns about the softness of global economic growth balanced optimism on US-China trade talks. The Brent crude price fell by US16 cents or 0.3% to US$60.22 a barrel. And the US Nymex price fell by US24 cents or 0.4% to US$54.85 a barrel. Over the week Brent fell by 2.1% and Nymex fell by 3.0%.

Base metal prices were generally firmer on the London Metal Exchange on Friday. Copper rose 2.5% but tin lost 3.9% and nickel lost 1.9%. Over the week metals rose up to 2.4% with copper doing best and zinc rose 2.2%. But tin lost 5.4%.

The gold futures price fell by US$7.90 or 0.5% to US$1,499.50 an ounce. The spot gold price was trading near US$1,488 an ounce in late US trade. Over the week gold fell by US$16 an ounce or 1.1%. Iron ore rose by US25 cents or 0.3% to US$99.10 a tonne. Over the week iron ore rose by US$11 a tonne or 12.5%.

Iran-backed Houthi rebels in Yemen have claimed responsibility for a drone attack on Saudi Arabia's Abqaiq plant. About half of the country's oil output has been affected.

G’day Australia

In Australia, no major data is expected. In China, retail sales, production and investment data is issued. In the US the Empire State manufacturing index is released.

 

Australia: Employment data in the spotlight

Friday, September 13, 2019

On Tuesday

The week kicks-off on Tuesday when the Australian Bureau of Statistics (ABS) issues data on home prices for the June quarter in its publication Residential Property Price Indexes. The figures are dated – early September data from CoreLogic is already being issued. But the publication includes the latest estimates on the number of homes in each state and territory.

On Tuesday weekly consumer confidence data is issued by ANZ and Roy Morgan. Sentiment is just below the long-run average levels. Worries about the economic outlook dominate although people are generally happy about the state of their finances. Also, on Tuesday the Reserve Bank issues minutes from the Board meeting held on September 3. Little guidance is expected on a future rate cut. But each month Board members discuss a topic of interest and that may provide fresh information for investors to contemplate.

On Thursday

On Thursday, the ABS released the August Labour Force publication. Not only is data provided on employment and unemployment, but there are also estimates on hours worked and under-utilised labour. The Reserve Bank will assess all these measures – not just the unemployment rate – when deciding if another rate cut is required. Commonwealth Bank Group economists expect that 20,000 jobs were created in August with the jobless rate unchanged at 5.2%. The Reserve Bank is expected to stay on the interest rate sidelines if the results are in line with forecasts. The jobless rate has been steady in recent months as more people entering the job market have picked up the new jobs on offer.

Also, on Thursday, the ABS releases population estimates for the March quarter. Australia’s population has grown by 1.6% over the past years, near the average growth pace over the past decade. Population is growing fastest in Victoria although Tasmania’s population is growing at the fastest rate in 28 years. And finally, on Thursday, the Reserve Bank issues its quarterly Bulletin – a publication that contains topical reports on the economy and financial markets.

Overseas: US Federal Reserve to decide on a rate cut

There are two stand-out events in the coming week. China releases monthly activity data and the US Federal Reserve holds its policy meeting over Tuesday and Wednesday.

On Monday

The week begins on Monday in China when the National Bureau of Statistics issues August data on retail spending, investment and industrial production. The data is important as it will show what impact that the trade dispute with the US is having on the Chinese economy.

On Monday in the US, the September Empire State manufacturing index is produced by the New York Federal Reserve, the index is regarded as an influential regional gauge on the economy.

On Tuesday

Over Tuesday and Wednesday, the US Federal Reserve policy-making committee meets – the FOMC. Financial markets are tipping another rate cut of 25 basis points (or a quarter of a percent) in order to sustain the record economic expansion.

On Tuesday in the US, the regular weekly reading on US chain store sales is due together with industrial production data, capital flows figure and the housing market sentiment index from the National Association of Home Builders.

On Wednesday

On Wednesday in the US, the weekly reading on mortgage applications is issued as well as the building permits and housing starts data for August. In July, building permits grew by a sizeable 8.4% – suggesting stronger building activity lies ahead. But the number of homes where work started in August fell by 4% to a 1.19 million annual rate.

On Thursday

On Thursday, the weekly figures on jobless claims are issued in the US, along with data on existing home sales and the leading index. In July sales of existing homes hit a 5-month high (second highest reading over the past year), up 2.5% on the previous month. The National Association of Realtors estimated the median house price at $280,800 in July, compared to $269,300 a year earlier. The leading index in the US is calculated by the Conference Board. After two modest 0.1% declines in May and June, the leading index lifted by 0.5% in July. There are ten indicators that make up the leading index including new orders, building permits and share prices. The Conference Board says the latest results “suggest the US economy will continue to expand in the second half of 2019, it is likely to do so at a moderate pace.”

Also, on Thursday the Philadelphia Federal Reserve manufacturing index is released. Just like the Empire State index, the Philly Fed index is seen as an influential gauge of the broader economy. On Thursday in the UK, the Bank of England policymaking committee meets. In New Zealand, economic growth data is released.

 

Good morning, Australia

Monday, September 09, 2019

How’dy USA

In US economic data, non-farm payrolls (employment) rose by 130,000 in August (forecast +160,000). The unemployment rate was steady at 3.7% as expected. Average hourly earnings rose by 0.4% (forecast +0.3%) to be up 3.2% on the year (forecast +3.0%). US Federal Reserve chair, Jerome Powell, said that the Federal Reserve will "act as appropriate" to sustain the US economic expansion. The Fed chair also downplayed the prospect of a global or US recession.

US share markets were mixed on Friday, as investors digested the latest news. The Dow Jones rose by 69 points or 0.3%. The S&P500 index rose by 0.1%, but the Nasdaq lost almost 14 points or 0.2%. Over the week the Dow rose 1.5% with S&P 500 and Nasdaq both up 1.8%. US treasury yields were flat on Friday. US 2-year yields were near 1.54% and US 10-year yields were near 1.56%. Over the week US 2-year yields rose by 3.5 points with 10-year yields up by 5.5 points.

Bonjour Europe

European share markets rose on Friday with Chinese stimulus offsetting softer US jobs data and German industrial orders. The People's Bank of China said it would cut the reserve requirement ratio by 50 basis points (bps) for all banks, with an additional cut of 100 bps for some qualified banks. The pan-European STOXX600 index rose by 0.3% and the German Dax gained 0.5% with the UK FTSE up by 0.2%. In London trade, shares of Rio Tinto rose by 0.4% and BHP rose by 0.5%.

Hello World!

Major currencies were mixed against the US dollar in US and European trade compared with the end of Asian trade. The Euro held broadly between US$1.1020 and US$1.1055 and was near US$1.1020 in late US trade. The Aussie dollar rose from US68.15 cents to US68.60 cents, ending US trade near US68.35 cents. The Japanese yen lifted from 107.08 yen per US dollar to JPY106.62 and was near JPY106.80 in late US trade.

Global oil prices rose by up to 1% on Friday. Prices had eased after the US job data, but lifted after comments from the US Federal Reserve chair. Supporting prices was data showing the number of oil rigs operating in the US fell by 4 to 738 in the past week. The Brent crude price rose by US59 cents or 1.0% to US$61.54 a barrel. And the US Nymex price rose by US22 cents or 0.4% to US$56.52 a barrel. Over the week Brent rose by 1.8% and Nymex rose by 2.6%.

Base metal prices were mixed on the London Metals Exchange on Friday. Zinc, copper and tin fell up to 0.9% and other metals rose up to 1.4% with lead up the most. Over the week metals rose by between 2.3% (aluminium) and 6.5% (tin). But nickel eased by 1.4%.

The gold futures price fell by US$10.00 or 0.7% to US$1,515.50 an ounce. The spot gold price was trading near US$1,507 an ounce in late US trade. Over the week gold fell by US$4.35 an ounce or 0.3%. Iron ore fell by US$2.10 or 2.3% to US$88.10 a tonne. Over the week iron ore rose by US$3.70 or 4.4%.

G’day Australia

Australian lending and US consumer credit data are issued.

 

Australia: Business and consumer confidence in focus

Friday, September 06, 2019

In the coming week there will be more insights into the economic environment in terms of business conditions and consumer sentiment. Home lending data will be scrutinised for a continued stabilisation in housing finance commitments. And the deceleration in Chinese tourist arrivals is expected to continue due to slowing Chinese economic growth and retail spending.

On Monday

The week kicks-off on Monday when the Australian Bureau of Statistics (ABS) issues new lending data for July. Property market conditions and activity have improved, boosting hopes of a continued stabilisation in housing finance approvals. But the all important spring selling season is crucial to the demand outlook.

On Tuesday

On Tuesday weekly consumer confidence data is issued by ANZ and Roy Morgan. Sentiment is around long-run average levels with volatility in share markets, Aussie dollar weakness and elevated petrol prices counterbalanced by lower mortgage rates, tax cuts and a bottoming in home prices. Also, on Tuesday NAB’s August business survey is released. Australia’s business sector lost momentum prior to the federal election> Forward looking indicators – particularly trading conditions and profitability – don’t point to an improvement in the near term. Global trade frictions are also weighing on sentiment, but lower interest rates and tax offsets are expected to eventually feed through to firms.

On Wednesday

On Wednesday, monthly consumer confidence data is issued by Westpac and Melbourne Institute. Sentiment lifted by 3.6% in August – the biggest lift in six months – propelled higher by a pick-up in consumer views on home purchases. Sentiment towards buying a dwelling is the most positive in 5½ years. Also, on Wednesday, tourism data is released by the ABS. In June, a record 11.2 million annual trips were made by Aussies - 5.4 million more than 10 years ago. But the annual growth rate for Chinese tourists travelling to Australia was just above 9-year lows at 1.4%.

On Thursday 

On Thursday, the Reserve Bank issues updated credit and debit card lending data for the month of July.  

Overseas: Inflation data issued in the US and China 

In the US, the two stand-out economic data releases in the coming week are consumer prices (inflation) and retail spending. In China, the focus is on international trade and inflation data.

On Sunday

The week begins on Sunday in China when the National Bureau of Statistics issues international trade data for August. Exports unexpectedly rose by 3.3% in the year to July, with goods shipped to the European Union and South-East Asian nations lifting, offsetting a decline in US exports due to rising tariffs.

On Monday

On Monday in the US, July consumer credit (or lending) data is also issued. Consumer credit card debt rose by US$14.6 billion in June – the weakest amount in three months – perhaps due to greater economic uncertainty.

On Tuesday

On Tuesday in China, consumer and producer prices data are scheduled. Consumer prices are lifting due to elevated fruit and meat prices. But the drop-in producer prices signalled that China’s industrial sector had slipped back into deflation due to lower automobile and raw material prices.

On Tuesday in the US, the regular weekly reading on US chain store sales is due together with the JOLTS series of job openings report. The number of job vacancies (7.3 million) remains above the number of unemployed (6.1 million) in the US due to a skills shortage and tight labour market.

Also, on Tuesday, investor attention will be on the reaction of the US small business sector (NFIB survey) to the latest escalation in China trade tensions. The details of the survey will be scrutinised, especially with respect to new business investment intentions and capital spending plans amid rising political uncertainty.  

On Wednesday

On Wednesday in the US, the weekly reading on mortgage applications is issued as well as producer prices and wholesale inventories data. Core producer prices unexpectedly declined by 0.1% in July – the first fall in two years – as costs declined for guestroom rentals, loan services, physician care and truck freight transportation. On Wednesday, Chinese data on new vehicle sales is expected.

On Thursday 

On Thursday, the weekly figures on jobless claims are issued in the US, along with consumer prices and the monthly budget statement. US core inflation rose by 0.3% to 2.2% from a year earlier in July, above economists’ expectations. Rising shelter, medical, clothing and used car prices are challenging US policymakers’ view that a return to its 2% inflation target would take longer than previously anticipated. Rising tariffs on goods could limit the case for additional US Federal Reserve rate cuts, despite weakening business investment.

On Friday

On Friday, the all-important US monthly retail sales report is issued. In July, consumer spending lifted by 0.7% – the most in four months – as Amazon Prime Day sales boosted online sales. Job and wage gains have buoyed consumer sentiment, despite concerns about the levying of import duties on consumer goods prior to Thanksgiving and Christmas.

Also, on Friday, the University of Michigan’s preliminary consumer confidence survey for August is issued. The survey was at 7-month lows in July, contrasting with near-cycle highs for the Conference Board measure. US trade prices are also released. Import prices rose by 0.2% in July after falling by the most in seven months in June with US dollar strength keeping a lid on import costs.

On Friday in China, money supply data may be released. 

 

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