Trading with point and figure

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** EVENTS PREVIEW **
********************

Somewhat unusually for the second working day of the month, the schedule of data and events is relatively busy. Initially, we await the details on the Japanese fiscal package, and have the as expected 25 bps rate cut in Australia to mull over, along with disappointing Australian Trade and Building Approvals. Ahead lies the UK Construction PMI, which is expected to have the German industrial avant garde rockers Einstürzende Neubauten (Eng.: collapsing new buildings) providing the mood music, with a further leg lower to 44.0 from 46.0, while the afternoon brings Personal Income / PCE, and potentially more significantly July Auto Sales, with New Zealand initially only publishing the Wages components of its Q2 quarterly labour report tonight. Ahead of Thursday's BoE rate decision and Quarterly Inflation Report, the UK DMO launches a new 5-yr benchmark Gilt (July-2022) which is bestowed with an all-time record low coupon of 0.50%, and has been trading 'when issued' at a ca. 5 bps yield premium to the existing 1.75% Sept-2022 Gilt, but 0.47% yield eminently has few outright attractions, though it am well look mouth-watering to the financially repressed masses of local investors in Japan, Eurozone, Switzerland, Denmark and Sweden. A further barrage of US and other corporate earnings is accompanied by Fed speak from Mr Kaplan, though he will doubtless merely repeat that a September rate hike is possible, depending on incoming data, which will more than plentiful between now and September 20/21 - per se such guidance is best sorted under A for Agnostic. In respect of Japan, the sharp shift higher in JGB yields can be seen on the attached two charts. The move is understandable in the context of the BOJ 'disappointment' last week, and the prospect of increased JGB supply due to the much anticipated fiscal package, with press conferences from the Economy and Finance ministers due very shortly.

** U.S.A. - June Personal Income/PCE & July Auto Sales **
- As is generally the case, the Personal Income / PCE data for the last month of the quarter have been largely pre-empted by the Q2 Advance GDP data, which showed a solid 4.2% SAAR pace for Personal Consumption, that is anticipated to translate into a June reading of 0.3% m/m following May's 0.4% m/m. The accompanying PCE Deflator are projected to show a 0.2% m/m headline reading, and a seemingly rather benign 0.1% m/m rise at the core level, which implies y/y rates of 0.9% and 1.6%, the latter being well below a core CPI readings of 2.3% y/y. But barring any very atypical surprises, the July Auto Sales data will perhaps attract more attention, not only for its implications for Retail Sales, but also in sector trend terms. Following a 'selling days' impacted and weaker than projected 16.61 Mln SAAR pace in June, the July reading is seen bouncing quite sharply to 17.2 Mln, which would be positive in terms of Retail Sales, if realized, and may well be beaten if estimates that range up to 18.1 Mln SAAR for July. However. with Ford suggesting that the recovery in the Auto sector has run its course, and with the likes of sector specialist such as J.D. Power and LMC Automotive looking for 2016 sales to slip modestly in yr/yr terms, which would be the first fall since 2009.

from Marc Ostwald
 
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