A big, big week here, in the US and globally, with Tuesday and Wednesday the key days here and in the US.
There’s the expected uncertainty from Tuesday’s US elections – especially if it’s a close result and Donald Trump won’t accept the result but overlaying this will be the record and rising number of COVID-19 infections, especially in the US and Europe.
There’s also global surveys of manufacturing activity – the first from China on the weekend was a solid reading for the health of that country’s economy.
In Australia, there’s the Reserve Bank Board meeting tomorrow and what will be another loosening of monetary policy – the US Federal Reserve’s meetings this week, earnings seasons continue in the US, Europe, and Australia and there’s the usual start of month data releases around the world as well.
Australia also sees a lot of economic data releases this week, including ANZ job ads, building approvals for September, CoreLogic house prices for October, housing finance for September, final retail sales and trade – both for September, along with the October survey of Australian manufacturing, and later in the week, services.
Car sales data will also be released and an update on payrolls and wages will be issued midweek.
The AMP’s Chief Economist, Shane Oliver wrote at the weekend that we can “expect to see CoreLogic report a 0.2% gain in dwelling prices for October and September data show a 3% rise in building approvals (both Monday), final retail sales to confirm a 1.5% fall in September but with real retail sales up 5% in the September quarter (Wednesday) and trade data to show a $3.7bn trade surplus (Thursday). Payroll jobs data will also be released Wednesday.”
The RBA will also publish its final quarterly Statement on Monetary Policy for 2020, on Friday – three days after the Tuesday meeting that will see monetary policy further relaxed.
Results are due from Westpac (already out), National Bank, Macquarie Group, CSR, UR Westfield, Amcor, Fox Corp, News Corp, and REA Group, along with some other quarterly updates and AGMs.
Tomorrow sees the running of the Melbourne Cup – it will be the race that runs silent – no spectators.
The US went off summertime on Sunday (US) time so Wall Street and ASX futures trading will close at 8 am Sydney time.
In Europe, policymakers at the Bank of England meet later in the week amid signs it could push for more stimulus spending.
China sees the release of the second surveys of manufacturing and services today and Wednesday and trade data for October will be out on Saturday.
The changes from tomorrow’s RBA board meeting will be dramatic.
There will be a cut in the cash rate, the term funding facility rate, and the three-year bond yield target to 0.1% (from 0.25%).
The AMP’s Dr. Shane Oliver says there will probably be an additional bond-buying (or QE) program beyond what would occur for maintaining the three-year bond yield at 0.1% of around $12 billion a month.
He says that “the RBA saying something along the lines that “it will be continued for as long as necessary”.
“This will amount to nearly $150 billion over a year and will focus on bonds beyond the three-year maturity. It may also come with a yield target for the five-year bond.
“A formal revision to forward guidance along the lines that “the RBA will maintain highly accommodative monetary policy settings as long as is required and will not increase the cash rate until full employment is reached and actual inflation is sustainably within the 2-3 percent inflation target,” Dr. Oliver wrote at the weekend.
“Further easing has already been foreshadowed by various RBA communications over the last month or so and the RBA will likely tie the need for more stimulus back to revised economic forecasts which will likely continue to show that it does not expect to meet its inflation and employment objectives over the next two years. Friday will also see the release the RBA’s Statement on Monetary Policy which will contain its latest economic forecasts,“ Dr. Oliver added.
