21 October 2020
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Australia: Reserve Bank Board minutes and more in focus

Craig James
16 October 2020

On Tuesday

The week kicks off on Tuesday with weekly readings on consumer sentiment from ANZ-Roy Morgan and payroll jobs and wages from the Bureau of Statistics (ABS). And the Commonwealth Bank (CBA) issues the September Household Spending Intentions (HSI) report. Also, on Tuesday, Reserve Bank Assistant Governor (Financial Markets) Chris Kent speaks at the IFR Australia roundtable webinar at 10am AEDT.

But most attention on Tuesday will be on the minutes of the Reserve Bank Board’s October monetary policy meeting (issued at 11.30am AEDT). The Board held the cash rate steady at the meeting but inserted a clear easing bias in the Statement: “The Board continues to consider how additional monetary easing could support jobs as the economy opens up further”. This keeps the door open for lower rates or bond purchases.

On Wednesday

On Wednesday, the preliminary September retail trade report and Westpac leading index for September are both issued.

On Thursday

On Thursday, Reserve Bank Deputy Governor, Guy Debelle, will deliver a speech: “The future of global code”, at FX Week Australia 2020 at 9.30am AEDT. Guy Debelle may provide some commentary on the economy and policy settings.

Also, on Thursday, the ABS provides an updated report: “Business impacts of COVID-19”, highlighting key business indicators, such as revenue and spending. The detailed labour force data for September is also due. And the NAB releases its September quarter business survey.

On Friday

And on Friday, IHS-Markit releases the preliminary manufacturing and services indexes for October.

Overseas: China economic growth (GDP) and US housing data dominates

In the coming week investors will be fixated on China’s ongoing economic recovery with an array of data released, including the all-important September quarter GDP report. In the US, housing data will be a key focus.

On Monday

The week kicks off on Monday with economists estimating that China’s (GDP) economy grew by 3.3% in the September quarter to be up 5.5% from a year ago. Annual growth rates for retail sales (up 1.9%), industrial production (up 5.8%) and fixed asset investment (up 0.9% in the 9 months from a year ago) are also forecast by economists in the month of September.

On Monday in the US, the National Association of Homebuilders (NAHB) housing market index is expected to remain near record highs of 83 points in October. And the monthly Budget Statement could also be issued.

On Tuesday

On Tuesday in China, the September house price index is issued and loan prime rates are announced.

In the US on Tuesday, the weekly Johnson Redbook chain store sales figures are released with housing starts and building permits data. Starts could lift by 2.4% to an annual rate of 1.45 million units in September with permits up 3.3% to an annual rate of 1.525 million units. Both measures eased in August.

On Wednesday

On Wednesday, the weekly data on US mortgage applications from the Mortgage Bankers Association (MBA) is due. But the Federal Reserve Beige Book will be of most interest to investors. The Beige Book surveys the 12 regional banks in the Federal Reserve system ahead of the eight scheduled policy-setting meetings each year.

On Thursday

On Thursday in the US, data on weekly claims for unemployment benefits (initial jobless claims) are issued together with the Conference Board’s leading index and the Kansas City Federal Reserve’s manufacturing index for October. The leading index is tipped to lift by 0.8% in September.

Also, on Thursday, the much-anticipated existing home sales report is issued for September. In August, closing transactions for previously owned US homes rose by 2.4% to a 6 million annualised rate – the fastest pace since late 2006 – fuelled by low borrowing costs. A sales gain of 3.3% is tipped in September.

On Friday

On Friday, IHS-Markit issues purchasing manager indexes for manufacturing and services activity across developed economies, including the US, Eurozone, UK and Japan.

Financial markets: US corporate reporting season

Corporate earnings for S&P 500 firms are expected to fall by around 21% in the September quarter compared with the year-ago quarter (June quarter: -30.6%), according to IBES data from Refinitiv.

On Monday

Halliburton, IBM, Steel Dynamics.

On Tuesday

Harley-Davidson, Lockheed Martin, Netflix, Philip Morris, Procter & Gamble, Raytheon Technologies, Snap, Travelers.

On Wednesday

Abbott Laboratories, Baker Hughes, Biogen, Chipotle, Microsoft, Verizon Communications, Whirlpool.

On Thursday

American Airlines, AT&T, Coca-Cola, Intel, Kimberly-Clark, Southwest Airlines.

On Friday

AMEX, Cleveland-Cliffs, Goodyear, Triton International.

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