Main Macro Events This Week
The resumption of global stimulus measures last week, thanks to the aggressive combined measures from the BoE, which were hot on the heels of BoJ accommodation the week prior, stood at odds with the firm July U.S. payrolls report that brought forward risk of a Fed hike this year. The July employment data significantly beat most expectations, and were in sharp contrast to the big U.S. GDP miss for Q2.
United States: The economic calendar resumes with one of the missing links in the recovery: preliminary Q2 productivity (Tuesday), which is expected to rise 0.6%. Also on tap are the NFIB small business optimism index and wholesale trade. MBA mortgage market data could be impacted (Wednesday) by the yield jump following July payrolls, while JOLTS job openings and EIA energy inventories are due, along with the Treasury budget gap forecast to widen to -$129 bln in July. Import prices are set to sink 0.5% in July (Thursday); export prices may remain unchanged. Initial jobless claims are forecast to drop 4k back to 265k for the week ended August 5. The highlight comes late in the week with the release of July retail sales (Friday), expected to rise 0.4%. Of interest will be any potential impact from Amazon’s “Prime Day,” which may have given sales a kicker. Price data will be important too as low inflation has been a stubborn factor keeping the FOMC sidelined. On this count, PPI is set to slip 0.1% in July. Preliminary Michigan sentiment for August is set to rise to 91.0, with business inventories rising 0.2%. There is no scheduled Fedspeak this week.
Canada: The calendar features a number of housing releases, the most prominent being July housing starts. We expect starts (Tuesday) to slow to a 210.0k rate in July from the 218.3k clip in June. Building permits values (Monday) are seen growing 1.0% in June after the 1.9% drop in May. The new home price index (Thursday) is projected to grow 0.4% m/m in June after the 0.7% bounce in May. The Teranet/National HPI for July will be released on Friday. The Bank of Canada is again silent this week. There is nothing on the Bank’s event calendar until the September 7 rate announcement, when we expect no change in the current 0.50% rate setting and a repeat of the cautiously optimistic growth outlook seen in July.
Europe: Eurozone confidence indicators may have come in better than expected and have shown no sign that the Brexit referendum has seriously undermined confidence in the region and backs the ECB’s wait-and-see stance. However, the aggressive move by the BOE last week puts the ECB back into focus and raises the possibility of more tweaking of the QE programme.
German industrial production is seen rebounding just 0.3% m/m in June, after falling -1.3% m/m in May, based on the weak orders number already released. Equally, Eurozone industrial production is seen rising 0.3% m/m after falling -1.2% m/m in May. However, June production numbers will be overshadowed by German and Italy preliminary Q2 GDP readings and the second and detailed Q2 GDP number for the Eurozone. We see German Q2 GDP growth slowing to 0.3%, Italian GDP is seen slipping to a 0.1% and after the slowdown in French growth already reported, the overall Eurozone GDP number is expected to be confirmed at 0.3% q/q – half the Q! figure. The calendar also contains final July inflation data, with German HICP expected to be confirmed at 0.4% y/y, the French reading at 0.4% y/y and the Italian number at -0.1% y/y. Headline rates are creeping higher, also thanks to base effects from oil prices, but readings are still sufficiently below the ECB’s upper limit for price stability to leave Draghi room to manoeuvre in September.
UK: Sterling finished last week at a 25-day closing low versus the dollar and, with the minutes to the MPC meeting on Thursday having noted that “a majority of members expected to support a further cut in the bank rate … at one of the MPC’s forthcoming meetings,” more losses seem likely. UK data this week features July RBC retail sales (Tuesday), seen at -0.7% y/y, June production data (also Tuesday), which will be too-Brexit vote tainted to interest much, and June trade data (Thursday).
China: July trade data (Monday) was expected to narrow, actually increased to $52.31 bln from $48.1 bln previously. July foreign direct investment (Monday or Tuesday) is expected to tumble to 4.0% y/y from 9.7% in June. July CPI and PPI (Tuesday) are forecast at a 1.8% y/y pace from June’s 1.9% for the former, and -2.1% y/y from -2.6% for the latter. July loan growth data are due during the week, along with new yuan loans, which are seen falling to CNY 1,000.0 bln from 1,380.0 bln. Friday brings July industrial output, which likely dipped to 6.1% y/y from 6.2% in June. July retail sales (Friday) are estimated to have slipped to a 10.4% y/y clip from 10.6%, while July fixed investment is forecast to have slipped to 8.8% y/y from 9.0% previously.
Japan: The July bank loan and money supply figures are due Tuesday, followed with June machine orders (Wednesday), which are expected to rise 2.0% m/m from the prior -1.4% reading. July PPI (Wednesday) is forecast to show some marginal slowing in the contraction rate to -4.1% y/y from -4.2% in June. The June tertiary industry index (Wednesday) should improve to 0.1% m/m from -0.7% in May. Japan will be closed Thursday for Mountain Day holiday. Friday’s slate is empty.
Australia: The calendar is highlighted by Reserve Bank of Australia’s Governor Stevens (Wednesday), who addresses the Anika Foundation Luncheon in Sydney. June housing finance (Wednesday) is seen rising 2.0% m/m after the 1.0% drop in May. ANZ job ads expected to improve to 0.2% m/m in July after the 0.5% gain in June, actually fell by -0.8%.
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