Weekly Reports | Sep 03 2010
By Greg Peel
Today across the globe is services PMI day, featuring measurements of activity in services industries in Australia, China, the UK, eurozone and ultimately the US. The US will be hoping for a repeat of the encouragement the market received from a positive manufacturing PMI release on Wednesday. Services represent 80% of US output.
But that number will no doubt be overshadowed by the most important data release of the session, and the week, and the month – the unemployment data. Expectations are for 110,000 jobs to be lost but once again the figures are impacted by the retrenchment of temporary census workers, so the figure in focus will be private sector jobs. There a 20,000 job gain is expected, but given the sudden rays of light which have shined on an otherwise gloomy US economic landscape this week, there is hope for something even better.
Either way, the pervading mood on Wall Street in this last week of the summer break is one of renewed optimism and consideration that perhaps all the concern over a double-dip has actually been priced into the stock market, and perhaps overly so. But then it is not unusual to have a decent snap-back rally every now and again before something triggers a return of the sellers.
As the Labor Day long weekend unofficially ends the summer, in theory all those holidaying traders and fund managers should be back at their desks next week ready to make a decision about whether to buy or sell. It will be interesting to see whether or not we actually see a pick-up in trading volumes after a woefully light August.
Next week is a much quieter one on the US economic front after this week's barrage. First up it's a long weekend, so all US markets will be closed on Monday night for the Labor Day holiday. Thereafter, releases include consumer credit and wholesale inventories and sales, along with the Fed's Beige Book which assesses activity in all twelve Fed regions.
There will also be another round of Treasury auctions, next week featuring US$67bn of three-year and ten-year notes and thirty-year bonds. Slowly but surely the supply of US Treasuries is reducing, adding to price pressure in bonds at a time when the Fed is rolling maturing mortgage securities into the two to ten-year bond range.
In Australia next week, ANZ will release its job ads series and TD Securities its monthly inflation gauge. On Tuesday the RBA will make a rate decision and elect to keep the cash rate at 4.5%. There will also be July home loan data released and on Thursday it's unemployment day.
Having left the results season behind this week we're beginning to see the first trickle of Annual General Meetings, which will start to ramp up as the month progresses. Next week also sees an extensive number of stocks going ex-dividend which acts as a natural drag on the index number.
Elsewhere in the world, the Bank of Japan will make a rate decision on Tuesday, the Bank of Canada on Wednesday and the Bank of England on Thursday.
For a more comprehensive preview of next week's events, please refer to "The Monday Report", published each Monday morning. For all economic data release dates, ex-div dates and times and other relevant information, please refer to the FNArena Calendar.
