A big week for Australia, the US, Europe, Japan, China and other major economies with meetings, survey results and important quarterly data due for release. It is in fact the first major data/meeting week for the year for many countries.
And it will be dominated by a combination of the expectations of an improving global economy, more possible US rate rises, the soaring US stockmarket, the contradiction of the slumping US dollar and rising values for the yen, euro and other currencies such as the Aussie dollar.
Those factors are setting up a tension that if it snaps, could damage investor confidence, stockmarkets and even the global economy if it produces a backlash in debt and emerging markets.
But the week ahead will be dominated by events in the US.
There’s the first meeting for 2018 of the US Federal Reserve – it won’t do anything because it is the final meeting for retiring chair, Janet Yellen; there’s President Trump’s second State of The Union Address early Wednesday our time and the January jobs data for the US on Friday night, our time.
And there’s also the US 4th quarter reporting season which steps up this week with a handful of tech giants – led by Apple and Facebook, plus Alphabet and Microsoft and Amazo that will test the health of the US stockmarket boom with the quality of their figures.
Here in Australia it’s the December quarter Consumer Price Index and other data (see separate story) including house prices for January.
There’s also the usual start of the month surveys of global manufacturing which will be issued on Wednesday and Thursday, and eurozone figures for inflation and unemployment out tomorrow night.
Ms Yellen will preside over her final meeting of the Federal Reserve with the US dollar on its weakest run since 2010-2011 when the Fed was spending heavily on its early rounds of quantitative easing. Unemployment has fallen sharply since then, debt has risen though, stockmarkets have rebounded and the global economy is enjoying its first synchronous run for six or seven years.
The AMP’s chief economist, Dr Shane Oliver wrote at the weekend “the Fed is not expected to make any changes to monetary policy but its commentary is likely to be upbeat and consistent with further monetary tightening this year, including ongoing quantitative tightening and another rate hike in March after Jerome Powell takes over.”
“We remain of the view that stronger US growth and rising inflation will drive four Fed rate hikes this year, whereas the US futures market is only pricing in two and a bit,” Dr Oliver forecast.
It will also be a busy week for data in the US with the jobless/payrolls on Friday night likely to show strong January jobs growth of 180,000, unemployment remaining low at 4.1% and wages growth rising slightly to 2.6% year on year.
There’s also the December personal spending data and a slight rise in core personal consumption inflation data out tonight (it’s the Fed’s preferred inflation measure), home prices and consumer confidence (tomorrow night, our time) and the January manufacturing conditions survey on Thursday (Feb 1).
December quarter earnings results also continue with around 120 S&P 500 companies due to release their figures, led by tech giants such as Amazon, Apple, Facebook, Alphabet (google) and Microsoft.
In Europe we get the early estimates of inflation and unemployment for January and the first estimate of 4th quarter GDP for the eurozone with growth expected around 0.8%, quarter on quarter, or an annual rate of 2.8%.
Fourth quarter, as well as six month and full year financial results start flowing from the UK and Europe this week.
Japan sees the release of the final end of month data on jobs and industrial production – inflation last week showed a small uptick.
The two Chinese business conditions surveys (due Wednesday and Thursday) are expected to remain consistent with solid growth as the country heads into February and the Lunar New Year break on February 16.
Australia sees the release of the December quarter inflation data (see separate story).
Other data releases will include the NAB business survey (tomorrow) credit growth for December and 2017 (Wednesday), business conditions surveys (Thursday), house price data for January (also Thursday) t and building approvals for December and 2017 (also Thursday).
