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What mattered last week and a preview of the week ahead

What mattered last week:

  • U.S. stocks finished higher for a fifth straight week on the back of progress on U.S. – China trade negotiations, talk of tariff rollbacks and better than expected U.S. September quarter earnings.
  • Which prompted a flow of money out of safe-haven assets including gold and bonds.
  • Gold finished the week -3.50% lower near $1460. Yields on U.S. 10 year bonds closed near 1.95%, to record their highest close in 14 weeks.
  • The RBA left interest rates on hold at 0.75% as expected and maintained a clear easing bias.
  • In its Statement on Monetary Policy, the RBA downgraded GDP and inflation forecasts, a combination that does little to improve the prospects for the economy to return to full employment or the RBA to achieve its inflation target.
  • Locally, the ASX200, reversed most of the previous weeks fall to close +0.80%, near 6725 as the choppy sideways price action, driven by sector rotation continued.
  • Economic downgrades by the RBA saw the AUDUSD ease from recent highs to close the week near .6850.

For the week ahead, the key events are:

Australia: NAB business confidence (Tuesday), Westpac consumer confidence and wage price index (Wednesday), employment (Thursday).

  • Employment (Thur): The market is looking for a 15k rise in employment which won’t be enough to prevent the unemployment rate from ticking back up to 5.3%.

New Zealand: Business inflation expectations (Tuesday), RBNZ interest rate meeting (Wednesday), Business NZ PMI (Friday).

  • RBNZ interest rate meeting (Wed): With the market already priced for 21bp of easing the RBNZ is expected to cut the OCR by 25bp to 0.75%.

China: Fixed asset investment, industrial production, retail sales, new yuan loans, total social financing (Thursday).

Japan: GDP Q3 (Thursday), industrial production (Friday).

U.S.: CPI (Thursday), retail sales and industrial production (Friday).

  • Retail sales (Fri): Retail sales are expected to rise by +0.2% in October after falling by -0.3% in September.

September quarter earnings reporting season winds up this week with reports from Walmart, Cisco, and Walt Disney.

Canada: New housing price index (Friday).

Euro Area: EA and German ZEW economic survey (Tuesday), EA industrial production (Wednesday), EA and German GDP Q3 (Thursday), balance of trade (Friday).

UK: GDP, industrial production (Monday), employment (Tuesday), CPI and PPI (Wednesday), retail sales (Thursday).


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