It’s the usual busy start of the month data drop around the world – this time against a backdrop of roiling markets confused about inflation, and in some cases, investors believing their own fairytales.
Globally the US jobs report for February will dominate sentiment – in the lead up with estimates and weekly jobless claims before the data is released Friday morning, Washington time. It is likely to show a solid recovery from the weakness in January, but the nervous nellies in the markets will be ready to grab at anything to justify their silly fears about inflation
Globally there’s the usual start of month surveys of manufacturing activity and services mid-week – strong showings in these reports will no doubt send the panicky inflationistas reaching for their sell buttons in bond markets.
China’s official survey is out today along with the private survey from Caixin magazine.
Earnings seasons are mostly over for now so it’s back to economic matters and in that vein in Australia the RBA is expected to leave monetary policy on hold at its meeting tomorrow having announced an extension to its bond buying program at its February meeting.
The AMP’s Chief Economist, Shane Oliver says that while the RBA “will likely try and push back against the rise in bond yields by reiterating that the economy still faces uncertainties and has a fair way to go to meet the RBA’s inflation and employment goals and that it does not expect the conditions to be met for a rate hike until at least 2024.
The 2% plunge in the value if the Aussie dollar on Friday will make the RBA happier as it means that its bond buying in the 10-year security (now a total of $US200 billion will be spent) seems to have had an effect, as did the extra $A6 billion of buying in the three year bond on Thursday and Friday.
And while the RBA’s comments on the strength of the economy will be watched closely, so too will be the 4th quarter and 2020 National Accounts and GDP numbers on Wednesday.
Dr Oliver says he expects December quarter GDP to show a solid 2.6% quarter on quarter gain driven by another strong rebound in consumer spending, housing construction and strong public spending.
“This will still leave GDP down -1.7% from its December quarter 2019 high, which compares to the US at -2.5%, the Eurozone at -3.1%, Japan at -1.3% and China at +6.5%,” Dr Oliver wrote at the weekend.
Watch for strong contributions (again) from household consumption – retail sales mostly and the external account with trade surplus again dominating the quarter. The December quarter current account data will reveal the size any contribution.
Today sees the release of the wages, stocks and business profits data and government financing transactions will be out tomorrow as well as the current account data.
House prices data for February will be issued today, car sales mid-week, manufacturing and service sector activity reports today and Wednesday, housing finance data for January today (up another 2%), building approvals tomorrow to show an easing at the start of 2021 and final retail sales and trade data for January later in the week on Thursday.
Offshore it’s the monthly jobs report from the US that will dominate thinking as well.
Dr Oliver says we can February payrolls (on Friday) to rise by a solid 160,000 after a couple of weak months but with unemployment rising slightly to 6.4% as participation rises.
US business conditions surveys for February (due today and Wednesday) are expected to remain strong at around 58-59.
There are some key earnings reports out from US retailers – Target, Costco, Nordstrom, American Eagle, Kroger and Wendy’s.
Eurozone inflation for February (Tuesday) is expected to remain around 1.4%yoy on a core basis and unemployment for January (Thursday) is likely to have risen reflecting the continuing lockdowns.
Japanese jobs data for January will be released tomorrow.
China sees the two survey of local manufacturing and services today and Wednesday.
January and February trade data will be issued next Sunday.
