The week kicks off on Monday when IHS Markit release the ‘final’ reading of the Australian services gauge for September. In the preliminary reading, services sector activity was unchanged at a two-month high of 50. The Melbourne Institute inflation gauge is also issued for September.
On ‘Super Tuesday’, the weekly reading of consumer sentiment from ANZ-Roy Morgan is released with ANZ job advertisements, international trade and new vehicle sales data. Recruitment activity has lifted for four successive months, led by a pick-up in jobs ads in ‘virus free’ states, but Victoria’s lockdown could weigh on the overall outcome.
The Reserve Bank Board meets on Tuesday. Commonwealth Bank (CBA) Group economists expect no change in policy settings. That said, the meeting is considered ‘live’ with a finely balanced decision expected on whether the Board cuts the cash rate to a fresh record low 0.1%, adjusts its 3-year bond yield target and looks to new drawdowns of its Term Funding Facility.
Also, on Tuesday, the Federal Budget is handed down at 7.30pm AEDT. The Federal Budget is seen as a once-a-year event. But the government’s finances can be tracked over time. Due to unprecedented government pandemic induced spending, an exceptionally large Budget deficit will be announced. On July 23, the Commonwealth Treasury forecast a deficit of $184.5bn for 2020/21. Since then, the JobKeeper and JobSeeker programs have both been expanded to “over $100 billion” and Melbourne’s Stage 4 lockdown was imposed in August. CBA Group economists expect a deficit of around $220 billion in 2020/21.
The spotlight will also be fixated on whether Treasurer Josh Frydenberg delivers at least $40 billion - at the behest of Reserve Bank Governor Philip Lowe - worth of stimulus on Budget night. Possible measures include personal income tax cuts, a business investment allowance tax break, a potential wage subsidy for new hiring (to succeed JobKeeper being phased out) and investment in infrastructure and manufacturing.
On Wednesday, the AiGroup September services gauge is scheduled with the Reserve Bank’s credit and debit card lending data for August. Also, on Wednesday, the Bureau of Statistics’ (ABS) weekly payroll jobs and wages data through to September 19 is released - ahead of the labour force report due on October 15.
On Thursday, the Western Australian State Budget for 2020/21 is scheduled.
And on Friday, the ABS issues lending data for August. The report captures trends in personal, business and home lending. In July, the total value of home loan approvals was just 3% below pre-virus levels in March. CBA Group economists expect a 2% lift in approvals in August. Also, on Friday, the Reserve Bank releases the semi-annual Financial Stability Review.
Overseas: US Federal Reserve meeting minutes in focus
A quiet week is in prospect on the US data docket ahead of the Columbus Day holiday weekend.
The week kicks off on Monday in the US with the release of services gauges from both IHS Markit and the Institute of Supply Management.
On Tuesday, the weekly Johnson Redbook chain store sales figures are released with international trade data for August. China’s purchases of US agricultural, manufacturing and energy exports in August will be a key focus. Also, on Tuesday, data on US job openings is released from the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS). The labour market is steadily improving with job vacancies up for a third successive month in July. And the number of available positions is tipped to lift from 6.18 million to 6.5 million in August.
On Wednesday, the regular weekly data on US mortgage applications from the Mortgage Bankers Association is released with consumer credit data. And the sole vice-presidential debate between Democratic senator Kamala Harris and Vice President, Mike Pence, will be held in Salt Lake City, Utah.
Also, on Wednesday, minutes are issued from the September 15-16 meeting of the US Federal Reserve Open Market Committee (FOMC). At the meeting, the FOMC left the target rate for the federal funds at a range of zero to 0.25%. All but four policymakers expect rates to remain near zero through to 2023. The Fed will target an inflation rate a little above 2%.
On Thursday in China, results of the private sector Caixin survey of purchasing managers will be issued. The services sector gauge is tipped to lift to 54.2 from 54 in September. On Thursday in the US, data on weekly claims for unemployment benefits (initial jobless claims) are issued.
On Friday, wholesale inventories and trade data for August round out the week.
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