Key Events: –
Thursday: Jackson Hole Symposium, UK GDP (Q2, 2nd)
Friday: Jackson Hole Symposium, US Durable Goods Data (Jul), Japanese CPI (Jul)
The highlight of the week will be the Fed’s annual Jackson Hole Symposium, which will begin on Thursday and run through Saturday. Interest in the event peaked when ECB President Mario Draghi’s attendance was confirmed (he has used this particular platform to announce notable changes to ECB policy in the past), however, a recent Reuters sources piece indicated that Draghi “will not deliver fresh policy steer at Jackson Hole.” This piece noted that “Draghi will focus on the theme of the symposium, fostering a dynamic global economy,” while the sources added that he is keen to hold off on policy discussion until the Autumn, as was agreed at the last rate-setting meeting in July. Draghi’s last notable personal address was at the Sintra conference, where markets took his comments as hawkish. The central bank has not been comfortable with such an assessment and has been trying to dial back expectations since the conference, with the most recent ECB meeting minutes showing that rate setters had expressed concerns about possible market overshooting regarding the Euro’s strength. Draghi is due to speak on the Friday (although a speech that he is due to deliver on Wednesday may garner more attention in the wake of the sources piece), as is FOMC chair Janet Yellen, although her address will centre on financial stability. There will be other central bankers of note attending from across the globe, and we await the release of the formal schedule (scheduled for late Thursday ET).
The Joint OPEC-Non-OPEC Technical Committee (JTC) is set to convene in Vienna on Monday, and although not much is expected from the meeting, oil markets will hang on any comments that emerge from the sit down. Platts note that the meeting “follows on from a similar meet-up in Abu Dhabi earlier this month in which Iraq, Kazakhstan, Malaysia and UAE were scrutinized, highlighting OPEC’s commitment to the pact but also the fact that its hands are somewhat tied.” Platts also posit that “the oil producer group’s options seem limited, leading to a preoccupation with ensuring compliance with output cuts and hoping that the strength of the oil markets lasts longer. There also seems to be a consensus that if deeper cuts aren’t invoked then the rebalancing could drag on much longer, placing even greater pressure to maintain conformity. But deeper cuts could compound the problem.”
North America: –
The only tier one US release comes on Friday in the form of July’s durable goods data. Analysts expect the headline metric to fall by 5.5% MM following last month’s 6.4% gain, with the core release seen at 0.4% MM and the orders non-defence ex-air metric expected to rise by 0.3% MM against previous readings of 0.1% and -0.1% respectively. Last month’s release was boosted by strong aircraft orders at the Paris Air Show. Commerzbank believe that we are “now likely to see a marked correction in July, as Boeing data suggest that aircraft orders were down sharply last month and no major change seems to be on the cards in defence goods and in other goods.”
Over the border, Canadian retail sales data for June (due on Tuesday) headlines the docket, there are no expectations but the previous MM reading stood at 0.6%, while the core MM print fell by 0.1%. Gasoline prices look set to weigh, while broader prices edged lower overall during the month. RBC forecasts point to a Q2 average 6.4% QQ annualized contribution to retail sales, which they suggest “would be above the Q1 average – and give the third consecutive above-6% annualized quarterly gain – as the consumer continues to be a strong driver of growth.”
Other releases of note during the week: Tuesday US House Price Index (Jun) Wednesday US Markit Manufacturing & Services PMIs (Aug, P) US New Home Sales (Jul) Thursday US Existing Home Sales (Jul)
There are no tier one economic releases during the week, so focus will fall on central bank rhetoric, sentiment indicators and survey data.
Other releases of note during the week: Tuesday German ZEW Survey (Aug) Wednesday Eurozone Markit Manufacturing & Services PMIs (Aug, P) Friday German GDP (Q2) German IFO Survey (Aug)
The second GDP estimate is due for release on Thursday, with analysts looking for 0.3% QQ and 1.7% YY, which would confirm the initial estimate. The industrial production and construction numbers released since the initial estimate have been minor so HSBC do not expect GDP to be revised in the upcoming release. The second estimate gives some insight into the expenditure data, with Lloyds suggesting that “spending is likely to have remained the main driver of activity, while stronger net trade growth may have contributed to the modest acceleration in GDP growth.” The ever-important index of services release will also be scrutinised, with the initial estimate pointing towards 0.3% MM growth. All in all, the economy continues to operate under a cloud of uncertainty, and while divisions have crept into the BoE over recent months negative real wage growth continues to worry the public and uncertainty is capping business investment.
Other releases of note during the week: Tuesday Public Finances (Jul)
The regional docket is extremely thin next week, as a result focus will fall on New Zealand’s trade data from July, which will be released on Wednesday evening (Thursday morning New Zealand time). Analysts expect that the deficit will remain relatively steady, with consensus looking for a deficit of NZD 200mln, against June’s NZD 242mln. ANZ suggest that “a positive picture for export commodity prices should support export values.” TD Securities point to seasonalities which don’t seem to have appeared this time out. July usually sees “exports shrink with the winter chill, while end of financial year spending tends to boost imports, hence the (seasonal) slide into a trade deficit usually occurs in July. Markets don’t see the import boost, hence median expects a smaller deficit.” Traders will also await the release of the pre-election economic and fiscal update. The release should show a
healthy set of fiscal accounts, which would leave space for plenty of election promises. Westpac note that “the tax take is already tracking well ahead of the forecasts made three months ago,” with consensus looking for a slightly wider operating surplus this time out, with scope for a boost to the forward dated fiscal projections. Expectations are for little, if any change to the economic projections that accompany the release.
Japan’s July CPI dataset is due to be released on Friday, with analysts looking for relatively steady prints of 0.4% YY for the headline, 0.5% YY for the ex-fresh food measure and 0.1% from the ex-fresh food and energy measure against prior readings of 0.4%, 0.4% and 0.0% respectively. Underlying inflationary pressures remain subdued in Japan despite years of ultra-loose monetary policy at the BoJ and the labour market sitting at its tightest in decades.
Other releases of note during the week: N/A