The G-20 summits usually don’t have much of an impact on financial markets these days with most economies doing well and Donald Trump’s unpredictability making everyone defensive and cautious.
And so it was this time with the Hamburg in Germany with the US stance on climate and trade (Trump and his administration do not believe in multilateral deals and arrangements) which saw a lack of unanimity. So the G-20 meetings final communique was more an expression of division, not agreement.
But there was no agreement on what to do with North Korea, with the assault on Qatar by Saudi Arabia and its friends in the Gulf, the growing instability in Venezuela, refugees, Syria or the Muslim gangsters in the Philippines.
So the G20 is over for another year and the global economy will go on growing, the US economy will continue to expand, with the Fed lifting interest rates, China will continue growing (as we start finding out over the next fortnight) and investors will be warily enthusiastic as the latest taper tantrum continues to rock financial markets.
The coming week will see more of the same – the taper tantrum will dominate market sentiment while the data will continue to show solid but unspectacular levels of economic activity.
In Australia, housing finance data for May is out tomorrow and could show a small rise for the first time in four months. The NAB’s business confidence and conditions surveys for June are also out tomorrow and are expected to show more solid activity.
Wednesday sees the release of the more volatile consumer confidence survey from Westpac and the Melbourne Institute.
In the US, the data is expected to show the economy is solid. The AMP’s Chief Economist, Dr Shane Oliver says we can expect continued strength in small business confidence and job openings (tomorrow night, our time), retail sales and industrial production to show solid growth and core consumer price inflation (all due Friday night, our time).
Federal Reserve chair Janet Yellen’s appears before the two houses of Congress this week for what could be her last testimony as Fed chair is she is not re-appointed by Trump early next year.
The June jobs surge with 220,000 new jobs reported and 47,000 extra for May and April means the chances of a third rate rise from the Fed in December is now very much on the cards.
In Canada, the country’s central bank is widely tipped to lift interest rates by 0.25% to 0.75% midweek after several hawkish comments by senior bank officials in recent weeks.
The Bank of Canada decision will come early Thursday morning, Sydney time and could continue to fuel the taper tantrum.
Even if the bank doesn’t move rates the chatter of commentary will be out of proportion to Canada’s importance globally.
The Fed’s Beige Book of anecdotal evidence on the economy (Wednesday) is likely to remain stuck in “modest to moderate” mode in terms of the characterisation of the US economy. It will be read in conjunction with Ms Yellen’s comments in her Congressional appearances.
And US June quarter earnings will start to flow with profits likely to be up around 10% year on year, according to Dr Oliver.
And Chinese economic data for June and the second quarter start flowing this week.
June inflation data is out later today and is expected to show CPI inflation stuck at an annual rate of 1.5% and producer price inflation unchanged at 5.5%.
June trade data is is out on Thursday and is expected to show import growth running at an annual rate of 15% and exports growing by around 10%, according to Dr Oliver.
China’s Bank loan details for May and the first half of the year are also out on Friday.
In Japan, the latest current account data is out later today.
