This week holds clues on recession risks
Sweden’s Riksbank may scrap plans to raise interest rates when its officials gather on Thursday.
Thursday sees the release of PMIs from around the world, which may provide insight into how deep the manufacturing slump is and whether it’s infecting the services sector.
Then on Friday the US will publish its payrolls report for August with Bloomberg Economics predicting an increase of 195,000.
Such data will help inform the likes of Federal Reserve Chairman Jerome Powell and European Central Bank President Mario Draghi as they enter September planning for policy meetings at which they’re expected to deliver fresh monetary stimulus.
“US GDP data show defensive posturing among businesses in the first half of the year, so the risk is that heightened uncertainty will lead to an even more aggressive pullback,” said Carl Riccadonna, chief US economist at Bloomberg Economics.
“This leaves consumers as the predominant engine of growth --and so the focus in the near term turns to income generation in the monthly jobs report. If the household income trend is intact, then consumers will be well positioned to shoulder the load in the back half of the year.”
US and Canada
Powell speaks in Switzerland on Friday just before Fed officials are set to go quiet. So this provides the last moment to inform investors about what the central bank is thinking. On Wednesday, regional Fed presidents John Williams, James Bullard, Charles Evans and Neel Kashkari will all speak and the central bank releases its Beige Book snapshot of the economy. Friday’s payrolls report wraps up the week.
In Canada, the Bank of Canada holds a rate decision on Wednesday that’s expected to lay the groundwork for a cut after the federal election in October. An employment report comes Friday.
The trade war will continue to reverberate and shape markets and the region’s economic outlook. Australia’s central bank is set to decide on interest rates on Tuesday although economists expect it to maintain its key rate at 1 per cent while leaving the door open to further easing. The next day, secondquarter GDP numbers are due with Bloomberg Economics penciling in a slight weakening to 1.5 per cent. On Friday, Japan posts household spending with economists anticipating its growth slowed in July.
Europe, Middle East and Africa
Sweden’s Riksbank may scrap plans to raise interest rates when its officials gather on Thursday. Meantime, the mood music for the ECB’s own upcoming policy decision due on September 12 will steadily increase in volume after hawkish members of its Governing Council last week signaled opposition to aggressive stimulus. A speech by ECB Chief Economist Philip Lane on Wednesday may guide investors before officials begin a pre-meeting blackout period. In the UK, the PMIs will give a health check on the economy with a potential no-deal Brexit now just weeks away. South Africa and Nigeria will report second-quarter GDP on Tuesday.