What to Watch - Week of 30 September 2024

Tapas Strickland | Markets Research 

Past week

• A big week in Australia, with the AUD lifting on the back of Chinese stimulus announcements (AUD +1.1% to 0.6881). The iron ore price is also up a smart 11% on the week, as are equities (CSI 300 +14.8% on the week)
• The RBA met and kept rates on hold, though Governor Bullock did note the board did not discuss the case to hike rates. However, the Monthly CPI Indicator continued to show elevated services inflation.

Week ahead

• In Australia, all focus on the extent to which households have started to spend the extra cash flow generated from recent tax cuts and government subsidies. Retail Sales (Tuesday) and Deposit data (Monday) will be watched closely. A lot of other data out too, including Building Approvals and the Goods Trade Balance.
• Offshore there are three key data points. US Payrolls (Friday), Eurozone CPI (Tuesday), and China PMIs (Monday) ahead of China’s Golden Week Public Holidays that extend through to 7 October.
• Consensus for US Payrolls (Friday) sits at 140k jobs and for the unemployment rate to be unchanged at 4.2%. However, there is little between 4.2% and the FOMC’s September Projection of the unemployment rate averaging 4.4% in Q4. Any lift would likely lift the probability of a follow up 50bp cut in November (currently 49% priced for a 50bp move).
• There are also other relevant US labour market indicators out in the week, including JOLTS (Tuesday), ADP Employment (Wednesday), and the employment sub-indexes of the Manufacturing and Services ISMs (Tuesday and Thursday). Overall, Services ISM is expected to remain expansionary.
• In the EZ CPI will dominate and where to date services inflation appears sticky, as it is in the UK and in Australia. There is little data of note in the UK, though BoE’s Chief Economist Pill is speaking on Tuesday. In Japan the Tankan is out as is the BoJ Minutes, though more focus on the policies of the new PM and whether they intend on going to fresh elections.
• Finally in NZ is the QSBO (Tuesday) and Employment Indicators (Friday)
   

View the full report here

Chart 1 - Past Week: Australian services inflation remains elevated 

Chart 2 - Week ahead: US Payrolls under focus, not much gap between the unemployment rate and the FOMC projection

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