Friday, 24 January, 2020

In Australia in the coming week, the December quarter inflation estimates dominate the calendar.

On Monday

Financial markets are closed on Monday in observance of Australia Day.

On Tuesday

On Tuesday, CommSec releases the quarterly State of the States report – a report that tracks the economic performance of state and territory economies. Also, on Tuesday, National Australia Bank releases the December business survey.

On Wednesday

On Wednesday, the Australian Bureau of Statistics (ABS) releases the key measure of inflation – the Consumer Price Index (CPI). The report is only produced on a quarterly basis so the results are scrutinised – especially given that the data is central to interest rate settings. After lifting by 0.5% in the September quarter, the CPI may have risen 0.6% in the December quarter. As a result, annual growth will be little-changed at 1.7-1.8%, from 1.7% in the September quarter.

Stripping out volatile elements, underlying inflation (as measured by the trimmed mean) may have lifted 0.4% in the quarter, taking annual growth down from 1.6% to 1.5%. In the quarter, petrol rose 4.5%, adding 0.14 percentage points to quarterly growth. Seasonal increases in domestic travel may have also boosted the CPI together with the effects of a weaker Aussie dollar on imported goods.

On Thursday

On Thursday, the ABS releases more detailed labour force estimates, allowing assessment across age groups and regions. Also, on Thursday, the ABS also issues data on import and export prices for the December quarter. Interest centres on whether the lower Aussie dollar is pushing up prices of imports.

On Friday

On Friday the ABS issues the December quarter data on producer prices – basically various measures of business inflation. And also, on Friday the Reserve Bank releases the Financial Aggregates publication that includes money supply and credit (lending) data.

Overseas: US Federal Reserve meeting is in focus

In the coming week many Asian economies observe Chinese New Year. In the US the key event is the first meeting of Federal Reserve policymakers for 2020.

On Monday

The week kicks off in the US on Monday with the release of new home sales data for December and an index of manufacturing from the Dallas Federal Reserve. A modest rise in home sales of near 1 per cent is tipped.

On Tuesday

In the US on Tuesday, data on durable goods orders (a measure of business investment) is issued with consumer confidence, the S&P/Case Shiller home price series and an index of manufacturing from the Richmond Federal Reserve. Home prices are up just 2.2% over the year. Also, in the US on Tuesday the regular weekly data on chain store sales is released.

On Tuesday and Wednesday the US Federal Reserve meets to decide interest rate settings (decision announced at 6am AEDT on Thursday). No change in rates is expected.

On Wednesday

On Wednesday in the US, the Mortgage Bankers Association releases weekly data on mortgage applications. Also, advance estimates on the trade balance for December are issued with pending home sales.

On Thursday

On Thursday in the US, the ‘flash’ or advance measure of economic growth (GDP) for the December quarter is issued. Economists expected that annualised growth was stable at 2.1% in the quarter. The regular weekly data on claims for unemployment insurance is also issued.

On Friday

And on Friday in the US the December personal income and spending figures are issued with the employment cost index, consumer sentiment and the Chicago purchasing managers index. The personal income figures are of interest as they contain the deflator (or inflation measure) tracked by the Federal Reserve. In China on Friday, the ‘official’ purchasing manager survey results are released.

Financial markets

The US profit-reporting (or earnings) season continues in the coming week. The following companies are included amongst those tipped to be reporting over the week.

On Tuesday

3M, Harley Davidson, Lockheed Martin, Phillips, Pfizer. Apple, Advanced Micro Devices, eBay.

On Wednesday

Alibaba, AT&T, Boeing, Dow, General Electric, McDonalds, MasterCard, Facebook, Microsoft, Tesla.

On Thursday

Coca Cola, DuPont, Eli Lilly, Amazon, UPS, ResMed, US Steel, Visa, Verizon, Sprint.

On Friday

Caterpillar, Chevron, Exxon Mobil, Colgate Palmolive, Honeywell, KKR.