What mattered last week and a preview of the week ahead 15th July

What mattered last week:

  • The S&P500 added another 0.75% last week as dovish comments from U.S. Fed Chair Powell confirmed the Fed would cut rates in late July, thereby delivering its first rate cut since 2008.
  • Ironically just days after Fed Chairman Powell’s dovish comments which included the statement “inflation pressures remain muted” both U.S. CPI and PPI data were stronger than expected.
  • In response to the stronger CPI and PPI data, the yield on the 10yr U.S. Treasury bond closed almost 10bp higher at 2.13%.
  • Bitcoin fell over 15% from its 13.2k high of last week after both U.S. Federal Reserve Chairman Powell and U.S. President Donald Trump spoke out against Facebooks Libra coin.
  • In Australia, despite the RBA delivering consecutive cuts in June and July, business and consumer confidence both fell, a worrying sign.
  • The ASX200 fell 0.80% for the week to close near 6700 although still within sight of its all-time high from 2007
  • In FX, the AUDUSD closed above .7000c partly due to talk of possible currency intervention to weaken the U.S. dollar, and the dovish Fed speak mentioned above.

For the week ahead, the key events are:

Australia: RBA meeting minutes (Tuesday), Labour force (Thursday), Home loans (Thursday).

  • Labour Force (Thursday): After the boost to the May numbers from election-related employment, a +25k number is expected in June which will keep the unemployment rate stable at around 5.2%.

New Zealand: CPI Q2 (Tuesday), Global Dairy Auction (Wednesday), balance of trade (Thursday).

  • CPI Q2 (Tuesday): The expectation is for CPI in Q2 to rise by 0.6%, which will see the year on year rate rise to 1.7% from 1.5%.

China: GDP Q2, industrial production, retail sales, fixed asset investment (Monday).

  • GDP Q2 (Monday): The expectation is for annual growth to slow to 6.2% from 6.4% in the prior quarter

Japan: Balance of trade (Thursday), CPI (Friday).

U.S.: Retail sales, industrial production (Tuesday), NAHB housing index, building permits and housing starts (Wednesday).

Fed speakers on the wires this week include Powell, Williams, Evans, Bostic, Bullard and Rosengren all before the Pre FOMC blackout period.

June quarter earnings season kicks with reports from companies including JP Morgan, Netflix, and Microsoft.

  • Retail sales (Tuesday): The retail control measure (ex-gasoline, autos, and building materials) is expected to rise by 0.4%. The headline number is expected to be slightly lower at 0.3%, as lower gasoline prices impact.

Canada: CPI (Wednesday), retail sales (Friday).

Euro Area: EA balance of trade and EA and German ZEW economic sentiment index (Monday), German PPI (Friday).

UK: Employment (Tuesday), CPI (Wednesday), retail sales (Thursday).


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