Australia: Taper tinkering from the Reserve Bank?

  • In the coming week, the Reserve Bank (RBA) will be at the front-and-centre of investors’ minds with the Board to provide updates on its policy settings amid an escalating health crisis and worsening near-term economic outlook.
  • The week kicks-off on Monday when the Melbourne Institute issues its monthly inflation gauge. In July, the headline and trimmed mean measures of inflation were both up 0.5 per cent.
  • Also on Monday, ANZ releases its measure of job advertisements. Ads had lifted for a record 13 successive months through to June, but fell by 0.5 per cent in July from 12½-year highs. Extended lockdowns in NSW, Victoria and the ACT are expected to reduce recruitment activity in August.
  • On Tuesday, ANZ and Roy Morgan jointly release the weekly consumer confidence survey. And credit and debit card lending data is scheduled for release by the RBA for July.
  • Also on Tuesday, the RBA Board meets and hands down its policy decision at 2.30pm AEST. At the meeting, Commonwealth Bank (CBA) Group economists expect the Board to announce that they will not proceed with a previously announced tapering of bond purchases. The Board had advised that they planned to reduce the weekly rate of bond buying from $5 billion to $4 billion from September. But with the hit to the economy from Delta-induced lockdowns far more significant than anticipated, we expect the Board to stick with the current level of purchases through to November.
  • On Wednesday, the Bureau of Statistics (ABS) releases the “Labour Account Australia” report, featuring key insights on the number of people working secondary or multiple jobs in the period to June.
  • Also on Wednesday, Guy Debelle, Deputy Governor delivers an online speech at TradeTech FX 2021 at 6.10pm AEST. And Dr Debelle returns to the “podium” with another online address on Thursday, this time to ASIFMA Compliance Week at 6.35pm AEST.
  • Also on Thursday, the ABS publishes its weekly payroll jobs and wages data for the fortnight to August 14.

Overseas: China data in focus in US holiday-shortened week

  • Chinese inflation, international trade and credit growth data are key focuses this week with the US economic data docket light on tier-1 releases in a holiday shortened week.
  • On Monday, US financial markets are closed in observance of the Labour Day public holiday.
  • In China on Tuesday, the National Bureau of Statistics (NBS) is scheduled to release international trade data for August. China’s imports and exports rose at double-digit annual rates in July, but growth has slowed as global efforts to control the contagious Covid-19 Delta variant weigh on spending. In August, exports are tipped to lift by 18.8 per cent on a year ago with imports up 27.2 per cent over the year.
  • On Wednesday in the US, the weekly data on US mortgage applications from the Mortgage Bankers Association is scheduled with the regular weekly Johnson Redbook chain store sales index. Consumer credit figures are also due. US consumer borrowing surged in June with total credit jumping US$37.7 billion – the most on record – due to large increases in credit card balances and non-revolving loans. Credit could lift by US$28.6 billion in July.
  • Also on Wednesday, the US Federal Reserve’s 12 districts provide updates on economic conditions in the Beige Book. And influential New York Federal Reserve President John Williams discusses the economic outlook.
  • On the data docket, the US Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) is released. US job openings surged in June to a fresh record high of 10.1 million available positions. And the IBD/TIPP economic optimism index is tipped to ease from 53.6 to 53.0 in September, rounding-out a busy day for investors.
  • On Thursday in China, inflation data is scheduled for August. Prices diverged in July with business inflation pressures building, while consumer prices remained largely contained. The Producer Price Index (PPI) jumped 9.0 per cent from a year earlier in July, the strongest growth rate since late 2008. But the Consumer Price Index (CPI) rose 1.0 per cent in July when compared to last year with food prices easing 3.7 per cent. The transmission of higher materials costs into downstream sectors remains limited. And in August, consumer prices are expected to lift by 1.1 per cent on a year ago with producer prices up 8.9 per cent over the year.
  • On Thursday in the US, the weekly claims for unemployment benefits (initial jobless claims) data dominates market attention.
  • On Friday in the US, wholesale inventories and producer prices data are both scheduled. The advances in the annual July headline PPI (+7.8 per cent) and core PPI (excluding food and energy, +6.2 per cent) were the largest annual gains since 2010. A lift in the monthly PPI of around 0.5 per cent is expected in August.
  • In China over the week, August credit data – aggregate financing, loan growth and money supply – are scheduled.

Ryan Felsman, Senior Economist, CommSec