Weekly Market WATCh
September 25, 2020
In Australia, retail sales fell in August, dragged down by the lockdown in Victoria, and payroll jobs declined in the two weeks to the 5 September. The Composite PMI crept back into expansion territory in September, led by manufacturing, while activity in services sector stabilised. The RBA Deputy Governor discussed options for further monetary policy easing, sparking speculation on possible interest rate cuts in October. Abroad, the flash PMI reports pointed to ongoing recovery in the US and Europe in September. The US labour market recovery appears to have stalled, yet the US housing market data remained strong.PDF Download PDF
September 18, 2020
In Australia, employment posted a surprising growth between early July and early August, despite the Melbourne lockdown. As the pandemic in Victoria eases, the leading indicators and consumer confidence have improved. Contrary to expectations, the RBA did not provide any details on government bond purchases beyond yield curve control in the August board minutes. Abroad, Chinese activity data suggested a robust recovery, with steel output at record highs. The Fed upgraded its 2020 growth and labour market forecasts, yet warned of downside risks related to reduced fiscal support in the US.PDF Download PDF
September 11, 2020
In Australia, new home loans posted a record rise in July, reflecting the reopening of the Australian economy in the previous months. Growth in job ads decelerated markedly in August, while business conditions deteriorated amid the Melbourne lockdown. However, both business and consumer confidence improved in August-September, and payroll jobs started to recover in late August, as the COVID-19 outbreak in Victoria eased. Offshore, US labour market data were a mixed bag. Chinese exports surged in August and iron ore imports remained near the all-time highs. The ECB left its monetary policy settings unchanged, as expected.PDF Download PDF
September 4, 2020
It was a busy week in Australia, with the national accounts report confirming the largest quarterly drop in GDP on record in Q2, the building approvals report printing a surprising increase in July and news of a jump in current account surplus in Q2, though the July trade figures pointed to a likely moderation in Q3 as consumer demand slowly recovers outside Victoria. The RBA left its interest rate targets unchanged, as expected, yet extended the Term Funding Facility.PDF Download PDF
Global PMI indices pointed to an ongoing recovery in manufacturing and services as well as a slowdown in the US labour market recovery.
August 28, 2020
A quiet week domestically and abroad ended with the Fed announcing its revision of its monetary policy strategy. The FOMC will now officially allow inflation to temporarily overshoot the Fed’s target.PDF Download PDF
Datawise, Australian capex and construction work done figures imply some upside risk to GDP numbers, though a sharp fall should still be expected. Recovery in the manufacturing and housing market continues in the US, yet labour market conditions and household sentiment remain weak.
August 21, 2020
Domestic monthly data this week suggests ongoing recovery outside of Victoria in July. As COVID-19 appears to have slowed down in Melbourne, the weekly consumer confidence gauge ticked up for the first time in almost two months. The US recovery continued in July and August, though its pace has slowed. Initial jobless claims unexpectedly bounced back above 1 million last week. The FOMC minutes flagged a low appetite for yield curve control, at least for now. In Japan, real GDP posted the largest drop on record in Q2 and the contraction in services deepened in August amid the second wave of COVID-19.PDF Download PDF