Written Commentary
- Lighter day for data and events, digesting hawkish BOJ minutes and RBA governor, expected RBI rate hold, mixed UK REC and RICS surveys, Japan Current Account & services survey; US weekly Jobless Claims, Fed’s Barkin, Mexico CPI and rate decision, further raft of earnings, US 30-yr sale ahead
- UK: headline RICS drop masks improving buyer enquiries and sales expectations, REC signals further easing in labour demand and wages
- USA: Weekly Jobless Claims and speech by Fed centrist Barkin likely to be highly sensitive given shift in Fed rate expectations
EVENTS PREVIEW
With the financial world in thrall to the BoJ and Japan, the overnight ‘Summary of Opinions’ from last week’s BoJ policy meeting inevitably gets top billing on an otherwise relatively limited calendar of data and events, though again replete with corporate earnings. There are also the UK RICS House Price and KPMG/REC Employment surveys, Japan’s Economy Watchers survey and Current Account to digest, with US weekly jobless claims and Mexican CPI ahead, the latter published just ahead of Banco de Mexico’s rate decision, where opinions are fairly even divided between no change and a 25 bps cut to 10.75%. A smattering of central bank speakers has more from RBA’s Bullock and Richmond Fed’s Barkin, while the US rounds off this week’s quarterly refunding with $25 Bln of 30-yr T-Bonds. Amongst the potential headline grabbers in terms of corporate earnings are China Mobile, Kakao, LG, Lotte Chemical, Mitsui Ming & Smelting and Tokyo Electron in Asia, while Europe looks to Allianz, Deutsche Telekom, KBC, Munich Re, Rheinmetall, Sandoz, Siemens and Zurich Insurance. Across the pond there are Cheniere Energy, Eli Lilly, Martin Marietta Materials, Brookfield, IamGold and Lundin Gold.
In terms of the overnight run of data and events, the very clear hawkish signals from the BoJ and RBA should put paid to any thought that sees central banks running scare of current market volatility (though obviously a more protracted period of risk aversion would likely prompt a rethink). The UK RICS and REC were mixed, with the headline dip in the RICS House Price Balance masking an improvement in buyer enquiries and expected future sales, while the REC survey saw permanent pay increases slowing further, along with hiring. Yesterday’s sharp about turn in equities in response to what was an unsurprisingly weak US 10-yr auction given the sharp drop in Treasury yields across the curve served a timely reminder (if needed) that it will take some time to unwind the imbalances and leverages that had accumulated in many portfolios and trading books. US weekly Jobless Claims will be very sensitive given the positions that have stacked up looking for the Fed to cut rates relatively aggressively by year end, and particular attention will be paid to Richmond Fed’s Barkin, who is typically a centrist in policy making terms
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