Macroeconomics: The Day Ahead for 2 August

  • Planned Pelosi Taiwan visit renders modest data and events schedule largely moot; digesting expected RBA rate hike, Korea CPI and UK House Prices, awaiting US Auto Sales and JOLTS Job Openings; OPEC JTC meeting and further raft of US shale producer earnings, plenty of Fed speakers; UK 10-yr sale
  • US Auto Sales: modest bounce expected, but still a far cry from pre- pandemic levels; also implies used car price pressures to ease at slow pace
  • Thoughts on China’s economy and property sector woes via interview with CGTN Europe: https://bit.ly/3QhK5uF

EVENTS PREVIEW

As is often the case on the second working day of the month, the statistical schedule is very thin, with South Korean CPI and UK Nationwide House Prices to digest, while ahead lie US JOLTS Job Openings and monthly Auto Sales. The events schedule is dominated by one question: will US House Speaker Pelosi arrive in Taiwan today as has been flagged, and how will China respond? This certainly marks a new low point in US China relations, and underlines that very sadly the world’s leaders doo appear to be leaning to the chest beating stupidity of the adage that when all economic means have been exhausted (absolutely untrue), then there is always the military option. There is the the expected RBA 50 bps rate hike to digest, ahead of a goodly volume of Fed speak, which may well echo Kashkari’s weekend comments on the Fed trying to push back heavily on market moves to lower Fed rate trajectory expectations in recent weeks. The energy sector looks to Japan’s Energy Summit and any news from OPEC’s Joint Technical Committee (JTC) meeting ahead of the full production meeting tomorrow, though expectations for in change for OPEC September oil output is now well discounted. Govt bond supply comes via £2.75 Bln of UK 10-yr, while US corporate earnings sees Marathon Petroleum and Occidental Petroleum head a further run of US shale producers, with AirBnB, Caterpillar, Molson Coors and Starbucks also among the likely headline makers.

Auto Sales will be the key US indicator of the day with a pick up to a 13.5 Mln SAAR (vs. June 13.0 Mln) pace expected, which implies a positive contribution to July Retail Sales. But this would still be way off the pre-pandemic average of 17.0 Mln, and still imply that Used Car price pressures are unlikely to ease as significantly, as faltering household durable goods consumption would normally imply.

Some thoughts on China’s economy and property sector woes via interview yesterday with CGTN Europe: https://bit.ly/3QhK5uF

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ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2021 ADM Investor Services International Limited.

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