The US government finance crisis moves into centre stage this week, along with the trials and tribulations of Chinese property group Evergrande and of course the continuing battle again Covid Delta and its economic and social impact.
The US government finance brawl will go right down to the wire and don’t be surprised if Wall Street falls out of bed on one or two days if it looks like being protracted or the Republicans appear to be getting the upper hand.
Today and tomorrow sees the wash up of Sunday’s German elections analysed, debated and projected.
The end of the week also sees the release of start of the month surveys of manufacturing, and in the case of China, service sector activity, while Australian house price data and US car sales figures – both rather sensitive figures at the moment – will be out Friday.
As well, Thursday marks the end of the month, the end of the quarter and for a handful of big and medium Australian companies, the end of a half.
Companies such as Westpac, the NAB, ANZ, CSR, Macquarie, James Hardie, Orica while a host of mining companies rule off their quarterly exploration and production efforts.
Still in Australia, we can expect August retail sales (on Wednesday) to be down 2.5% according to the AMP’s Shane Oliver who wrote at the weekend that the Covid lockdowns continue to impact consumption.
Dr Oliver also sees building approvals to fall 3% “reflecting the ongoing unwinding of the HomeBuilder boost.” Thursday sees the end of month credit data from the Reserve Bank with “a further acceleration in housing credit”
Dr Oliver also thinks August job vacancies held up reasonably well consistent with private job ad data (out Thursday), and housing finance for August to show a 2% fall (out Friday).
He also sees the CoreLogic home price data for September on Friday to show a solid 1.3% gain in capital city property prices led by Brisbane, Sydney and Adelaide (out Friday).
This week the US Congress will need to pass a continuing funding resolution to avoid a Government shutdown from this Friday, October 1.
The AMP’s chief economist, Shane Oliver and other commentators reckon the Congress will pass the necessary extensions.
Moody’s economists wrote at the weekend: “Congress has a September 30 deadline to renew expiring government spending authority for the 2022 fiscal year that begins October 1. Failure to do so would result in a government shutdown.
“Then there is the Treasury debt limit, which was reinstated on August 1 of this year,” according to Moody’s.
On the US data front the key focus will be on the September manufacturing activity survey on Friday. He says this is expected to have remained strong at around 60.
Friday sees the monthly release of data on consumer activity and prices – the so-called PCE (private final consumption expenditure) inflation data tracked closely by the Fed.
Dr Oliver says the core private final consumption deflator inflation is likely to slow to a moderate 0.2% month on month rise but remaining high on an annual basis of 3.6%.
There’s durable goods orders figures later today, consumer confidence and home prices (tomorrow) and pending home sales (on Wednesday).
In Europe the euro zone’s preliminary inflation rate for September is forecast to be up an annual 3.3%, up from 3% in August.
Moody’s says that soaring energy prices will remain the driver of inflationary pressures in Europe (and the UK), especially gas and the higher oil price.
Core prices will also be on the rise, according to Moody’s. Meanwhile, business and consumer sentiment in the bloc likely decreased only slightly in September.
The Federal Reserve also remains in focus this week with more Fed appearances and speeches. These will include Chairman Jerome Powell who testifies twice before Congress on the pandemic and the policy response to it.
Treasury Secretary Janet Yellen will join him for the hearings Tuesday and Thursday. Powell also appears on a European Central Bank panel with other central bank leaders Wednesday.
In Asia Thursday sees the release of Japanese industrial production data for August which Dr Oliver says is likely to show a further fall and jobs data and the quarterly Tankan business survey from the Bank of Japan will be released Friday and is likely to show a small rise in business confidence.
Chinese business conditions surveys on Thursday will be watched for some improvement after the relaxation of some coronavirus restrictions this month.
China starts the week-long national day break on Friday. That will give Evergrande more time to try and wangle its survival and hopefully time for the Chinese government to prepare the way for some sort of last rites.
