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Australia: Reserve Bank Board meeting minutes and retail spending data in focus

  • In the coming week, minutes of the last Reserve Bank (RBA) Board meeting are issued. Preliminary retail trade data and purchasing managers’ indexes of services and factory activity dominate the data docket.
  • The week kicks off on Tuesday when ANZ and Roy Morgan issue the weekly consumer sentiment index. The Bureau of Statistics (ABS) also releases provisional travel statistics for March. And Commonwealth Bank (CBA) Group economists provide an update on Household Spending Intentions (HSI) in March using Google trends data.
  • Also on Tuesday, investors and economists will pay close attention to the minutes of the April 6 Reserve Bank Board. At the meeting policymakers reiterated that they see subdued increases in wage growth and consumer prices over the coming years due to an extended period of above-average jobless rates and excess capacity.
  • The RBA Board said it would keep the cash rate on hold at 0.1 per cent until 2024 “at the earliest” when “actual inflation is sustainably within the 2 to 3 per cent target range.”
  • CBA Group economists expect the Reserve Bank to maintain the April 2024 bond as the target bond for yield curve control, despite a shift to the November 2024 bond being considered by the Board in the coming months.
  • On Wednesday, preliminary retail trade data for March is issued. Retail spending fell by 0.8 per cent in February due to ‘mini lockdowns’, but was still up 9.1 per cent on the year. CBA Group economists expect spending to rebound by 0.8 per cent in March.
  • Also on Wednesday, the National Skills Commission issues the final March job vacancy report with ads at 12-year highs. And the ABS provides preliminary estimates of household income, wealth and housing costs in the “Household financial resources” survey for September 2020.
  • On Thursday, detailed March labour force data is issued with a focus on regional and demographic group results.
  • On Friday, preliminary April IHS-Markit purchasing managers’ indexes are released for the manufacturing and services sectors. The March manufacturing activity reading was amongst the highest since the survey began in May 2016. And services activity expanded for a seventh successive month in March.

Overseas: US corporate reporting season the highlight

  • A quiet week on the economic data docket is in prospect featuring purchasing manager indexes, regional Federal Reserve business surveys and US housing data. The US corporate reporting season cranks up a gear.
  • The week kicks-off on Tuesday in China, when 1-year and 5-year loan prime rates are announced.
  • On Tuesday in the US, regular weekly Johnson Redbook chain store sales figures are due.
  • On Wednesday, weekly mortgage applications data are issued by the Mortgage Bankers Association (MBA). The average 30-year fixed mortgage rate has risen to near 3.35 per cent in April from recent cycle lows of 2.85 per cent in November 2020, increasing borrowing costs for households.
  • On Thursday, the closely-followed weekly data on jobless claims (claims for unemployment benefits) are issued with monthly existing home sales figures. Sales of previously owned homes declined to a 6-month low in February, reflecting a record annual decline in the number of available properties, driving up home prices. Economists expect existing home sales to fall 1.8 per cent to an annual rate of 6.11 million in March.
  • Also on Thursday, influential regional business surveys – the Chicago Federal Reserve national activity index and Kansas City Federal Reserve manufacturing index – are both scheduled with the Conference Board leading index. The leading index is tipped to lift 0.7 per cent in March.
  • On Friday, new US home sales data are expected to rebound 17.4 per cent in March to an annual rate of 910,000 after dropping 18.2 per cent in February due to bad weather – the sharpest decline since July 2013.
  • Also on Friday, preliminary April IHS-Markit purchasing managers’ indexes are released for developed world economies. Divergence in business activity between the US and Europe has been a key feature of the economic recovery with solid manufacturing growth and a revival in the services sector most evident stateside.

Financial markets: US corporate reporting season

  • Corporate earnings for S&P 500 firms are expected to increase by around 25 per cent in the March quarter compared with the year-ago quarter, according to IBES data from Refinitiv.
  • Companies scheduled to report on Monday: Coca-Cola; Kaiser Aluminium; Northern Trust; Steel Dynamics; Snap-On; United Airlines.
  • On Tuesday: Biogen; Harley-Davidson; Johnson & Johnson; Kinder Morgan; Lockheed Martin; Moelis; Netflix; Procter & Gamble; Travelers Companies.
  • On Wednesday: Baker Hughes; Chipotle; Crocs; Halliburton; Whirlpool.
  • On Thursday: AT&T; Cleveland-Cliffs; Dow; Freeport-McMoRan; Intel; Mattel; Southern Copper; Snap; Southwest Airlines; Valero Energy.
  • On Friday: AMEX; Kimberly-Clark; Schlumberger.

Originally published by Ryan Felsman, Senior Economist, CommSec