Central banks and US data run top day's scheduled agenda, as politics,
trade continue to cast long shadow: UK BRC Sales, Construction PMI to
digest ahead of US Manufacturing ISM, Auto Sales & Construction Spending;
BoE testimony, Fed, RBA & ECB speak; German & French bond sales
- BoE: focus likely to be on Brexit questions more than policy outlook,
Carney future as governor in focus
- US Manufacturing ISM: further dip expected on lower Prices Paid, but
still indicating robut pace of growth
- US Auto Sales: modest bounce seen after year to date low in July,
drop in incentives a drag ahead of key Labour day weekend for sales
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** EVENTS PREVIEW **
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The day's schedule of data and events is certainly not overwhelming, and very much dominated by the run of US statistics: Manufacturing ISM, Construction Spending and Auto Sales; otherwise there are the UK BRC Retail Sales (once again sluggish) and Australian Q2 Current Account to digest ahead of the UK Construction PMI (seen dipping after jumping unexpectedly in July), and perhaps most senistively given the current bout of EM turmoil, South African Q2 GDP, for which a very lame 0.6% SAAR (though much better than Q1's -2.2% SAAR) and 1.0% yr/yr are expected. Talking of EM stress, and in the wake of yesterday's Macri press conference announcements and budget cuts, Argentine officials are said to be meeting with the IMF today. On the central bank front, the RBA kept rates on hold at 1.50% as expected, and unsurprisingly signalled that a rate hike is still a very distant prospect, even though it remains overall upbeat on the economic outlook, a message which governor Lowe will likely underscore when he speaks later. Carney and other BoE MPC members will be testifying on the August rate hike and Q3 Inflation Report to the Treasury Select Committee, which will likely be hijacked by Brexit related questions, many of which will be tedious, but this should also see some discussion of the status of preparations for the financial sector, and Carney will eminently be pressed about whether he does or does not intend to extend his tenure as governor beyond the middle of next year, as recent media speculation suggests; Chicago Fed's Evans and ECB's Nowotny round off the day's run of speakers. Austria and Germany top the bond auction schedule, and the US will also sell $145 Bln total of 1-, 3- & 6-mth T-bills, notable for the fact that this will be a $16 Bln drop in total size from last week, the first such drop since April, though volumes will increase again in October, as such any related dip in short-end yields may prove to be short-lived.
** U.S.A. - August Manufacturing ISM / Auto Sales **
- Today's bevvy of US statistics are to a certain extent hostage in impact terms to whatever headlines emerge on the political front, be that related to trade or the Mueller investigation. Be that as it may, the Manufacturing ISM is seen dipping to 57.6, just above April's 2018 low of 57.3, and down from July's 58.1, but in absolute terms clearly still signalling a robust pace of activity. Regional surveys have been somewhat mixed (Chicago, NY & Richmond very strong, Philly & KC dropping quite sharply), with the Markit PMI posting a modest drop to 54.5, the low for 2018, but still considerably stronger than 2017 levels, and the PMI has notably been stuck in a tight range year to date, in contrast to the earlier surge in the ISM measure. Somewhat unusually on Auto Sales, the median estimate of a modest pick-up to a 16.8 Mln SAAR pace from 2018 low of 16.68 Mln in July exactly matches the various estimates from Cox Automotive, Edmunds and J.D. Power/LMC Automotive, and equates to a 1.0% m/m increase, and thus suggesting a very slight boost from Autos to August Retail Sales. Notably total incentives (discounts, etc) are again expected to fall in yr/yr terms for a second consecutive month, though the decline at $141 on average vs August 20176 will be considerably smaller than in July.
From Marc Ostwald
