Banks, the October Reserve Bank board meeting and September jobs reports from the US, along with the trials and tribulations of Deutsche Bank will dominate the week.
The heads of our big four banks start what will become an annual charade today when they start fronting up to a Federal parliamentary committee as a form of ‘punishment’ devised by the Turnbull government to avoid the Royal Commission demanded by the ALP, the Greens and some cross benchers.
Each bank CEO will have three hours before the committee starting with the CBA’s Ian Narev this afternoon, with the ANZ’s Shayne Elliott tomorrow and Westpac’s Brian Hartzer and the NAB’s Andrew Thorburn on Thursday.
The RBA board meeting and decision is later today (no change), the US jobs report is on Friday night (another solid figure is expected), our time, but the focus will remain squarely on the woes of Deutsche Bank until its US fine is sorted.
Executives from the bank are going to the US to reportedly sort out a final figure for the fine – not the ballpark $US14 billion, but something closer to $US4 to $US5.5 billion.
Until that is done, there will be a degree of volatility around markets, as we saw last week as Deutsche shares sank, then rebounded on Friday (up 14% at one stage).
The main interest rate decisions will be made in Australia and India and both are tipped by polls of economists to leave their rates on hold. Both decisions come later today.
After a sort of reasonable report on the health of US manufacturing overnight, Friday night’s payroll and jobless report on Friday night will be the main focus for global markets as it will feed into the Fed’s thinking for a decision on US interest rates.
Payroll employment is likely to be solid at 170,000 – 180,000 new jobs, but unemployment is likely to remain around 4.9% and wages could edge up to 2.6%. Reuters reckons “ ll up this should keep the probability of a December Fed rate hike around 60%.”
The week in the US will end with “Fedspeak” blitz on Friday, with four speeches scheduled for delivery after the release of the jobs report.
The (northern) Fall sessions of the International Monetary Fund and the World Bank will be held in Washington at the end of this week.
Before then there will be an update of the IMF’s World Economic Outlook. Fund Managing Director Christine Lagarde said last week that the institution would lower its 2016 US growth forecast again after cutting it to 2.2% from 2.4% in July.
Ms Lagarde will share the stage in Washington on Thursday with Bank of England Governor Mark Carney who will be wondering if the UK economy needs any more help after further strong post-Brexit data last week suggested that another rate cut is not needed.
In Australia, the RBA is expected to leave interest rates on hold for the second month in a row at 1.5%.
The AMP’s Dr Shane Oliver says “Not enough has changed since the last rate cut in August, most recent commentary from the RBA including from Governor Lowe has expressed a broadly neutral tone regarding rates and the RBA is likely waiting for the release of the September quarter inflation data in late October as a guide to whether it will cut in November."
"Governor Lowe has already stressed the importance of “what the next inflation data look like” as a determinant of whether another rate cut occurs and it will be interesting to see whether the post meeting Statement makes reference to this as it did three months ago ahead of the release of June quarter inflation data.
"Our view remains that the RBA will cut again at its November meeting but this assumes another low September quarter inflation result and the $A remaining uncomfortably high. Given recent solid growth data we would have to admit that getting another rate cut is a close call,“ Dr Oliver wrote at the weekend.
On the data front in Australia, building approvals (today), retail sales (tomorrow) and the trade deficit (Thursday) will also be released.
In the US, the debate between Republican vice presidential nominee Mike Pence and Democratic nominee Tim Kaine happens tomorrow, our time (around midday). The debate will be held at Longwood University in Farmville, Virginia.
In Britain, Prime Minister, Theresa May makes a second speech to the final session of the Conservative Party annual conference tomorrow night, our time. Her first speech on Sunday to the opening session set March as the deadline for the UK to trigger the formal process for leaving the EU, and also the process of dismantling economic and political ties.
