A review of the week past and the week ahead

Charts (3)

What mattered last week:

  • Strong economic data, positive vaccine progress, and more talk of stimulus helped the S&P500 close last week 4% higher.
  • Despite rising cases of Covid-19 that has necessitated some states in the U.S (and here in Australia) to put further “re-opening” plans on hold to contain the surge.
  • However, a general lockdown seems unlikely again due to the economic cost and better protection for the vulnerable and treatment for the ill that has helped limit a spike in Covid-19 fatalities.
  • Volatility, as measured by the VIX index, closed lower at 27.7.
  • U.S. 10-year yields closed marginally higher at 0.675%.
  • Gold closed the week slightly higher near $1775.00.
  • Crude oil closed almost 5% at U.S $40.32/bbl buoyed by solid economic data.
  • The ASX200 closed the week at 6057.0 for a gain of 2.60%.
  • In FX, the AUDUSD closed the week near .6950 supported by better risk sentiment.

For the week ahead, the key events are:

A key focus for traders this week will be on new Covid-19 cases predominantly in the U.S. and here in Australia.

Australia: ANZ job ads (Monday), RBA interest rate meeting (Tuesday), home loans (Thursday).

  • RBA interest rate meeting (Tuesday): The RBA is unlikely to make any changes to its current policy settings. Interest rates are likely to remain at 0.25%, the RBA will maintain its dovish forward guidance including a willingness to act if more support is needed.

New Zealand: NZIER business confidence and capacity utilization, global dairy auction (Tuesday), electronic retail card spending (Friday).

China: Foreign exchange reserves (Tuesday), CPI (Thursday).

  • China CPI (Thursday): CPI is expected to rise slightly from 2.4% y/y to 2.5% y/y, with core measures also expected to remain low.

Japan: Leading economic index (Tuesday), current account (Wednesday), machinery orders, and machine tool orders (Thursday), PPI (Friday).

U.S: ISM non-manufacturing PMI (Monday),  JOLTS job opening (Tuesday), jobless claims (Thursday), PPI (Friday).

*Fed speakers on the wires this week include Quarles, Daly, Bostic, and Barkin.

*June quarter earnings reports commence. 

Canada: BoC business outlook survey (Monday), IVEY PMI (Tuesday), housing starts (Wednesday), employment (Friday).

  • Employment (Friday): Following a surprise gain of 290k jobs in May, the market is looking for a rise of 675k jobs in June. The unemployment rate is expected to drop from 13.7% to approximately 12.0%.

Euro Area: German factory orders and construction, EA retail sales and construction (Monday), German industrial production (Tuesday), German balance of trade (Thursday).

UK: Construction PMI (Monday), Halifax house price index (Tuesday).

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