A review of the week past and the week ahead

Charts (2)

What mattered last week:

  • The S&P500 fell for a third straight week, as September lived up to its reputation for volatility.
  • Despite the FOMC meeting providing dovish reinforcement for the Feds new policy framework announced at Jackson Hole.
  • Economic data in the U.S continues to improve. However, the rate of improvement is slowing and with a 4th U.S. stimulus package on hold, economic concerns remain.
  • New coronavirus cases continued to trend lower in the U.S, and Australia. However, cases in India and Europe continue to rise, particularly in Spain and France.
  • Much stronger than expected Australian employment data, pushed back the urgency for new easing measures from the RBA.
  • Volatility, as measured by the VIX index, closed lower at 25.8.
  • U.S. 10-year yields closed higher, near 0.70%.
  • Gold closed back above U.S. $1950.00.
  • Crude oil surged over 10%, closing at U.S $41.32/bbl.
  • The ASX200 closed mostly unchanged at 5864.5.
  • In FX, the AUDUSD closed marginally higher near  .7290.

For the week ahead, the key events are:

Australia: Speech by RBA Deputy Governor Guy Debelle (Tuesday).

  • Speech by RBA Deputy Governor Guy Debelle (Tuesday): Debelle will deliver a speech on Tuesday titled “The Australian Economy and Monetary Policy” at the Australian Industry Group conference. Unlikely to be a market mover but worth keeping an eye out for just in case.

New Zealand: RBNZ interest rate meeting (Wednesday), balance of trade (Thursday).

  • RBNZ interest rate meeting (Wednesday): The RBNZ is like to reiterate that the OCR will be left unchanged until March and remind the market that it is examing 4 policy options if more stimulus is required including expanding the LSAP program, reducing the OCR below zero, a term lending scheme to banks, and the purchase of foreign assets (such as foreign government bonds).

China: China Loan Prime rate (Monday).  

Japan: Jibun flash PMIs (Wednesday), BoJ monetary policy meeting minutes (Thursday).

U.S: Existing home sales (Tuesday), house price index, Markit flash PMI’s (Wednesday), initial jobless claims, new home sales (Thursday), durable goods orders (Friday).

Canada: Nothing of note.

Euro Area: German consumer confidence and German and EA Markit flash PMI’s (Wednesday), IFO business survey (Thursday).

  • Euro area ‘flash’ PMIs (Wednesday): The second wave of the coronavirus pandemic in Europe suggests that Euro Area PMI’s are vulnerable to a decline in September.

UK: Markit flash PMI’s (Wednesday), GFK consumer confidence (Friday).

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