MAJOR HEADLINES – PREVIOUS SESSION
- CA Jun. GDP out at +0.2% m/m, as expected, vs. +0.1% prior
- US Jun. S&P/CaseShiller House Prices out at +0.28% m/m, +4.23% y/y vs. 0.2%/3.5% expected and revised 0.53%/4.64% prior resp.
- US Aug. Chicago PMI out at 56.7 vs. 57.0 expected and 62.3 prior
- US Aug. Consumer Confidence out at 53.5 vs. 50.7 expected and revised 51.0 prior
- US Aug. NAPM-Milwaukee out at 59.0 vs. 60.3 expected and 66.0 prior
- US Weekly ABC Consumer Confidence out at -45 vs. -44 expected and -44 prior
- AU Aug. AiG Performance of Manufacturing Index out at 51.7 vs. 54.4 prior
- China Aug. PMI Manufacturing out at 51.7 vs. 51.5 expected and 51.2 prior
- AU Q2 GDP out at +1.2% q/q, +3.3% y/y vs. 0.9%/2.8% expected and revised 0.7%/2.6% prior resp.
- China Aug. HSBC Manufacturing PMI out at 51.9 vs. 49.4 prior
- NZ Aug. ANZ Commodity Prices out at -1.4% vs. -0.8% prior
THEMES TO WATCH – UPCOMING SESSION
(All Times GMT)
- GE Retail Sales (0600)
- AU Commodity Price Index (0630)
- Sweden Swedbank PMI Survey (0630)
- Norway PMI (0700)
- Swiss SVME PMI (0730)
- GE PMI Manufacturing (0755)
- EU PMI Manufacturing (0800)
- UK PMI Manufacturing (0830)
- US Challenger Job Cuts (1130)
- US ADP Employment Change (1215)
- US ISM Manufacturing (1400)
- US ISM Prices Paid (1400)
- US Construction Spending (1400)
Market Comments:
Wall St spluttered into the close of August with a less-than-impressive display, though at least broad-based declines were halted and the S&P held the 1,040 mark on the month. US data points were a mixed bag yesterday with consumer confidence beating expectations, rising to 53.5 in August from 51.0 in July (though the sub-components of the index were not quite as bullish as the headlines with most improvements seen in the expectations part) while the Chicago PMI fell just short of expectations with a 56.7 print from 62.3 previously (and an expected 57.0). Meanwhile CaseShiller house prices were up 1.0% m/m, 4.2% y/y which was more than consensus.
The FOMC minutes of the last meeting indicated that some Fed officials were not comfortable with the final statement that was issued, with some expressing concerns that reinvesting repayments of principal from agency debt and MBS would eventually make the exit path more difficult. On the economy, some members were worried about increased downside risks for both growth and inflation but there was little discussion on detailed options for further easing. The minutes effectively capped any chance risk had of a comeback at month-end.
It was a different story in Asia in the new month with most data releases beating forecasts and indicating that the Asian economy might still have some steam left in it. First off Australia’s performance of manufacturing index slipped to 51.7 in August, down from 54.4 last but still holding above the 50 contraction/expansion threshold. Perhaps of a more significant note, China’s official PMI data for the same month beat forecasts with a rally to 51.7 from 51.2 last, breaking a 3-month downward trend and beating market expectations of a 51.5 reading. The HSBC-produced equivalent PMI release showed an ever stronger rebound to 51.9 from 49.4 the previous month.
Australia’s growth numbers for the second quarter were also above forecast, rising 1.2% q/q and 3.3% y/y, both well above the market consensus of 0.9% and 2.8% respectively. Final consumption expenditure was up 1.6% q/q from 0.6% in Q1 while terms of trade rose a strong 12.5% q/q from 5.7% prior. The AUD responded as expected to the positive numbers, again confounding (or at least postponing) a bear celebration. AUDUSD jumped 20-30 points on the data and seemed well supported during the rest of the session while AUDNZD confirmed the break above key resistance levels yesterday.
Heading into Europe we will see if the Euro-zone can maintain the upward turn in risk as we face the slew of manufacturing PMI data from a number of countries -Sweden, Norway, Switzerland, Germany, Euro-zone and the UK while we also have German retail sales on tap. For the US session we can expect Challenger job cuts and the private ADP employment change along with the ISM manufacturing and prices paid indices and concluding with construction spending for July.