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Australia: Reserve Bank Board minutes, Deputy Governor speech and retail trade data in focus

  • In Australia over the coming week, the highlights are a speech from the Deputy Reserve Bank Governor and the preliminary retail trade report. The Reserve Bank’s Board minutes will be heavily scrutinised for clues about a potential interest rate cut.
  • The week kicks off on Tuesday with weekly readings on consumer sentiment from ANZ-Roy Morgan and payroll jobs and wages from the Bureau of Statistics (ABS). And the Commonwealth Bank (CBA) issues the September Household Spending Intentions (HSI) report.
  • Also on Tuesday, Reserve Bank Assistant Governor (Financial Markets) Chris Kent speaks at the IFR Australia roundtable webinar at 10am AEDT.
  • But most attention on Tuesday will be on the minutes of the Reserve Bank Board’s October monetary policy meeting (issued at 11.30am AEDT). The Board held the cash rate steady at the meeting, but inserted a clear easing bias in the Statement: “The Board continues to consider how additional monetary easing could support jobs as the economy opens up further”. This keeps the door open for lower rates or bond purchases.
  • On Wednesday, the preliminary September retail trade report and Westpac leading index for September are both issued.
  • On Thursday, Reserve Bank Deputy Governor, Guy Debelle, will deliver a speech: “The future of global code”, at FX Week Australia 2020 at 9.30am AEDT. Guy Debelle may provide some commentary on the economy and policy settings.
  • Also on Thursday, the ABS provides an updated report: “Business impacts of COVID-19”, highlighting key business indicators, such as revenue and spending. The detailed labour force data for September is also due. And the NAB releases its September quarter business survey.
  • And on Friday, IHS-Markit releases the preliminary manufacturing and services indexes for October.

Overseas: China economic growth (GDP) and US housing data dominates

  • In the coming week investors will be fixated on China’s ongoing economic recovery with an array of data released, including the all-important September quarter GDP report. In the US, housing data will be a key focus.
  • The week kicks off on Monday with economists estimating that China’s (GDP) economy grew by 3.3 per cent in the September quarter to be up 5.5 per cent from a year ago. Annual growth rates for retail sales (up 1.9 per cent), industrial production (up 5.8 per cent) and fixed asset investment (up 0.9 per cent in the 9 months from a year ago) are also forecast by economists in the month of September.
  • On Monday in the US, the National Association of Homebuilders (NAHB) housing market index is expected to remain near record highs of 83 points in October. And the monthly Budget Statement could also be issued.
  • On Tuesday in China, the September house price index is issued and loan prime rates are announced.
  • In the US on Tuesday, the weekly Johnson Redbook chain store sales figures are released with housing starts and building permits data. Starts could lift by 2.4 per cent to an annual rate of 1.45 million units in September with permits up 3.3 per cent to an annual rate of 1.525 million units. Both measures eased in August.
  • On Wednesday, the weekly data on US mortgage applications from the Mortgage Bankers Association (MBA) is due. But the Federal Reserve Beige Book will be of most interest to investors. The Beige Book surveys the 12 regional banks in the Federal Reserve system ahead of the eight scheduled policy-setting meetings each year.
  • On Thursday in the US, data on weekly claims for unemployment benefits (initial jobless claims) are issued together with the Conference Board’s leading index and the Kansas City Federal Reserve’s manufacturing index for October. The leading index is tipped to lift by 0.8 per cent in September.
  • Also on Thursday, the much-anticipated existing home sales report is issued for September. In August, closing transactions for previously owned US homes rose by 2.4 per cent to a 6 million annualised rate – the fastest pace since late 2006 – fuelled by low borrowing costs. A sales gain of 3.3 per cent is tipped in September.
  • On Friday, IHS-Markit issues purchasing manager indexes for manufacturing and services activity across developed economies, including the US, Eurozone, UK and Japan.

Financial markets: US corporate reporting season

  • Corporate earnings for S&P 500 firms are expected to fall by around 21 per cent in the September quarter compared with the year-ago quarter (June quarter: -30.6 per cent), according to IBES data from Refinitiv.
  • Reporting on Monday: Halliburton, IBM, Steel Dynamics.
  • On Tuesday: Harley-Davidson, Lockheed Martin, Netflix, Philip Morris, Procter & Gamble, Raytheon Technologies, Snap, Travelers.
  • On Wednesday: Abbott Laboratories, Baker Hughes, Biogen, Chipotle, Microsoft, Verizon Communications, Whirlpool.
  • On Thursday: American Airlines, AT&T, Coca-Cola, Intel, Kimberly-Clark, Southwest Airlines.
  • On Friday: AMEX, Cleveland-Cliffs, Goodyear, Triton International.

Published by Ryan Felsman, Senior Economist, CommSec