What mattered last week and a preview of the week ahead

Charts (3)

What mattered last week:

  • The S&P500 closed the week 0.5% higher, supported by a downward trend in new coronavirus cases in former hotspots and optimism about a vaccine.
  • Despite the U.S. Senate and House of Representatives failing to agree on a new stimulus package before going into recess until the second week of September.
  • The RBNZ left monetary policy unchanged. However, it still delivered a dovish outcome by extending its LSAP from NZD 60bn to NZD 100bn and extended its duration from 12 to 22 months.
  • Volatility, as measured by the VIX index, closed mostly unchanged at 22.1.
  • U.S. 10-year yields closed higher near 0.71% after both core and headline inflation numbers in the U.S. experienced their largest one month increase since 1991.
  • Gold fell 10% from its highs before recovering to close down around 4.5% near $1945.
  • Crude oil closed almost 2.00% higher, at U.S $42.01/bbl.
  • The ASX200 closed over 2% higher at 6126.2, after retreating from range highs near 6200.
  • In FX, the AUDUSD retreated on Friday to close for a second week near .7150.

For the week ahead, the key events are:

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

  • RBA meeting minutes (Tuesday): Are expected to reflect the RBA’s uncertainty about the recovery and that it remains dovish with an easing bias.

June reporting season will continue this week with reports from companies including BHP, Coles, Flight Centre, Wesfarmers, Qantas, and Webjet (previews available on the City Index website).

New Zealand: Global dairy auction (Tuesday), PPI (Wednesday).

China: Loan Prime Rate (Thursday).

Japan: Q2 GDP (Monday), balance of trade and machinery orders (Wednesday), CPI, and Jibun manufacturing PMI’s (Friday).

  • Q2 GDP (Monday): A third consecutive quarter of negative growth (-7.6%) is expected as a result of the coronavirus pandemic.

U.S: Housing starts, building permits (Tuesday), FOMC meeting, and jobless claims (Thursday), Markit PMI’s (Friday).

  • FOMC (Thursday): The minutes are expected to remain dovish and allude to a move towards inflation targeting which will allow for a period of above target inflation.

Canada: CPI (Wednesday), retail sales (Friday).

Euro Area: EA current account (Wednesday), German PPI (Thursday), German and EA Markit PMI’s (Friday).

UK: CPI (Wednesday), retail sales, and Markit PMI’s (Friday).

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