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What mattered last week and a preview of the week ahead


What mattered last week:

  • U.S. stock markets gyrated in the early part of last week, before signs of solid progress from U.S. – China trade talks emerged, sending stock markets higher into the weekend.
  • “Phase one” of a trade deal has been agreed and includes the U.S. suspending planned tariff increases in return for increased agricultural purchases from China, along with agreements on intellectual property, access for financial services firms and on the currency.
  • The good news on trade negotiations saw yields on U.S. 10-year bonds rise by 20 bp to 1.73%. Elsewhere, gold fell -1.55%, closing the week near $1485.00.
  • An end in sight to Brexit appears close with the UK and Irish parliaments working on a deal on the Irish backstop. GBPUSD rallied almost 3% to close the week near 1.2650.
  • Locally, the AUDUSD shrugged off a sharp fall in consumer confidence to finish the week near .6800c, buoyed by U.S. – China trade deal optimism.
  • Which also helped the local bourse the ASX 200 ~1.5% higher to close the week back above 6600.

For the week ahead, the key events are:

Australia: RBA meeting minutes (Tuesday), Westpac leading index (Wednesday), labour force (Thursday).

  • Labour force (Thursday): The market is looking for a 15k increase in jobs in September and the unemployment rate to remain steady at 5.3%. The labour market remains a key focus for the RBA and with the underemployment rate uncomfortably high, further interest rate cuts are likely.

New Zealand: Q3 CPI (Wednesday).

China: Balance of trade, new yuan loans, total social financing (Monday), CPI and PPI (Tuesday), Q3 GDP, industrial production, retail sales, fixed asset investment (Friday).

  • Q3 GDP (Friday): The market is looking for GDP to fall r to 6.1% in the September quarter, from 6.2% in the June quarter.

Japan: Industrial production, capacity utilization (Tuesday), CPI (Friday).

U.S.: Retail sales (Wednesday), housing starts, business permits, industrial production (Thursday).

  • Retail sales (Wednesday): Headline retail sales are expected to rise +0.3%. The retail sales control group (excludes autos, gasoline, and building materials) is expected to rise +0.4%.

September quarter earnings reporting season kicks off this week and includes reports from Goldman Sachs and Morgan Stanley.

Canada: CPI (Wednesday), manufacturing sales (Thursday), Federal Election (Sunday).

Euro Area: EA industrial production (Monday), EA and German ZEW Economic survey (Tuesday), EA balance of trade (Wednesday), EA current account (Friday).

  • Euro area industrial production (Mon): Is expected to have expanded by 0.3% for August after falling by -0.4% in July.

UK: Labour market (Tuesday), CPI and PPI (Wednesday), retail sales (Thursday).

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