Start of month, start of quarter and the start of the new financial year, so it will be a busy week ahead for investors and markets here and offshore – punctured by the US Independence Day holiday Tuesday night, our time.
America’s jobs report for May is the major global data release – on Friday night, our time – as usual.
Globally we’ll see the release today and tonight of the start of month surveys of manufacturing activity – watch the private survey from China later today and whether it matches the rise in the official survey on Friday.
US and European surveys will also bear watching, but Britain could see a weak report,
In Australia, the Reserve Bank board meets tomorrow is the big event and it will leave interest rates on hold for the 11th month in a row.
The RBA has made it clear that it is prepared to look through recent volatility in data, and wait to see how the labour market performs in this half of the year, as well as wait for a stronger upturn in business investment and a further cooling in house prices in Sydney and Melbourne.
Dr Shane Oliver, The AMP’s Chief Economist, doesn’t see the RBA starting to talk about ‘normalising’ monetary policy for some time, unlike what we saw last week with the sell off in bonds and shares .
“(O)ur base case remains that the RBA will leave interest rates on hold for the next year at least, but for the next year there remains more risk of a cut than a hike,” he wrote.
On the data front there’s the usual first week data dump with June house price data today from CoreLogic data, the AIG business conditions report for June, and building approvals for May (also out today). ANZ job ads data for June will also be issued today.
Tomorrow sees May retail sales, while on Thursday we get the May trade surplus. The AIG report on the services sector is out Wednesday, with car sales for June and the first half of the year also out mid-week.
In the US the focus will be on the manufacturing conditions report to be released tonight, our time and May’s jobs data to be released Friday.
Dr Oliver says the manufacturing survey will again be solid (one for the US Midwest surprised on the upside late last week) and 175,000 new jobs are forecast to have been created last mont (against the first reported of 138,000 in May). Unemployment is expected to stay around 4.3% with moderate wages growth.
The minutes from the Fed’s last meeting (Wednesday night) will also be looked at for clues on the outlook for interest rates and why the Fed remains determined to lift rates in the absence of any inflationary or wages pressures.
Interestingly the fed chair, Janet Yellen is due to make her mid-year appearance before Congress next week, but on Friday the Fed said it will release its half year monetary policy statement this Friday to allow debate and discussion before the chair’s appearance five days later.
In Europe the Eurozone unemployment rate for May will be released tonight and is expected to show a fall to 9.2%, according to Dr Oliver.
In Japan the Tankan business survey from the Bank of Japan is out today for the June quarter (Monday) and is expected to again show improved conditions.
And China’s Caixin manufacturing survey is out later today as well.
This Friday and Saturday sees the G-20 leaders meeting in the German city of Hamburg. Donald Trump is due to attend and we can expected a frosty reception from the host, German Chancellor Angela Merkel and her government after Trump’s abuse and denigration of Nato and German economic and trade policy.
Trump and his Russian counterpart, Vladimir Putin are due to meet on the sidelines of the G-20 conference in Germany and that will draw huge attention from media and other politicians.
Mr Putin isn’t the only world leader on Mr Trump’s agenda for the meeting. He is also expected to talk to China’s Xi Jinping, Britain’s Theresa May, Japan’s Shinzo Abe and South Korea’s Moon Jae-in. Mr Trump is also expected to talk with Mexico’s president, Enrique Peña Nieto. Will he talk to Canada’s Justin Trudeau. He is also due to talk to Prime Minister Turnbull.
