MACRO MENU: 3 - 7 August 2020
Global confirmed cases of coronavirus have now topped 18.6mln, registering 685,179 deaths worldwide, according to the Johns Hopkins University. Despite these sobering statistics, US cases rose by 58,908 on Saturday, the least in five days, marking a 1.3% day-on-day increase that’s less than the 1.6% average for the previous seven days.
For markets, the situation remains one in flux and the nature of the reproductive rate of the virus means that the situation and subsequent actions by authorities could happen quickly. Localised responses and regional data will be key as to distinguishing between isolated clusters vs community spreading, such as what was seen in Leicester and Blackburn. For now, we will remain on high alert for updates throughout the week with focus in the UK, Spain and France.
US Non-Farm Payrolls
Employers likely added just over 1.5 million workers to payrolls last month, or about a third of the prior month’s pace, according to a Bloomberg survey ahead of Friday’s Labor Department report, which covers the period through mid-July. The jobless rate is projected to drop by 0.6 percentage points to 10.5%, compared with a 2.2-point decline in June, and still triple the pre-pandemic level of 3.5%.
Over the coming weeks analysts at ING note that with virus fears on the rise, jobs being lost and incomes being squeezed, they feel the recovery could be much bumpier than markets seemingly do.
Bank of England and Reserve Bank of Australia
I expect the Bank of England to stand pat this week with a unanimous vote to leave policy unchanged. Last time out, the Bank expanded the Asset Purchase Facility (APF) by GBP 100bln and despite growing murmuring on Threadneedle Street of negative rates, this month's meeting is about taking stock on actions already delivered and observing incoming data while monitoring COVID-19 developments.
Australia’s central bank meets on Tuesday and is set to keep its overnight cash rate and three-year yield target unchanged despite the first bout of deflation in 22 years. The Aussie docket is full this week (Trade data, retail sales, RBA Monetary Policy Statement) and attention domestically remains on the latest COVID outbreak, with Australia’s Victoria state tightening restrictions this weekend and declaring a state of disaster after its outbreak showed no signs of abating three weeks after capital Melbourne was put under lockdown. Metropolitan Melbourne has also been put under curfew limiting movement between 8 p.m. to 5 a.m for the next six weeks.
Will OPEC change its mind?
At the end of last week WTI crude futures dipped towards $38.50, testing the 50DMA and low of July 10th, as market participants became jittery about the global pandemic and renewed quarantine measures being adopted globally.
UK/EU bank earnings take the floor
From an index trader's point of view last Thursday's mega-cap tech earnings were the crescendo of the season with the 129 S&P companies reporting this week unlikely to invoke the same excitement. Nonetheless it remains busy for the UK and mainland Europe with large cap names including HSBC, BP and Bayer.
- Data: Chinese Caixin Manufacturing PMI. EZ, UK & US Manufacturing PMIs (Final), US ISM Manufacturing PMI & Construction Spending
- Speakers: Fed’s Bullard & Evans
- Earnings: HSBC, Societe Generale, Natixis, Marathon, McKesson, Tyson Foods
- Data: US ISM New York Index & Factory Orders, New Zealand HLFS Unemployment
- Events: RBA & RBI Monetary Policy Decisions
- Supply: UK
- Earnings: BP, Bayer, Evonik, Infineon, Intesa Sanpaolo, Telecom Italia, Disney, Wynn, Activision, Spirit Aerosystems
- Data: Chinese Caixin Services PMI, EZ, UK & US Composite and Services PMIs (Final), EZ Retail Sales, US ADP & ISM Non-Manufacturing PMI, Canadian Trade Balance
- Event: BCB Monetary Policy Decision
- Speakers: Fed’s Mester
- Supply: UK & Germany
- Earnings: Allianz, BMW, Deutsche Post, Continental, Dialog Semiconductor, Teva, Regeneron, Marathon, Moderna
- Data: EZ Construction PMI, US Initial/Continued Jobless Claims
- Event: BoE Monetary Policy Decision & MPR
- Supply: France
- Earnings: Adidas, Credit Agricole, UniCredit, Deutsche Lufthansa, ING, T-Mobile, Bristol-Myers, Mylan, Motorola, Norwegian Cruise Lines
- Data: German Industrial Output & Trade Balance, US & Canadian Labour Market Reports, Chinese Trade Balance
- Event: RBA SOMP
- Earnings: Novo Nordisk
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