APAC Strategy Team
Summary: The week’s focus will be on the U.S. CPI scheduled to release on Wednesday. The strong employment report in the U.S. last Friday casted doubts about the aggressive pricing of rate cuts next year. All eyes will be on the CPI data to gauge how the tug of war between Fed's inflation fighting and the market's recession fear evolves. In Asia, the focus will be the July aggregate financing and credit data from China.
The highly-watched US inflation data is on the radar in the week ahead, and the debate on inflation peaking vs. higher-for-longer will be revived. Meanwhile, the Fed has recently stayed away from providing forward guidance, which has now made all the data points ahead of the September 21 FOMC meeting a lot more important to predict the path of Fed rates from here. Bloomberg consensus expects inflation to slow down from 9.1% YoY in June to 8.8% YoY last month, but it will be more important to think about how fast inflation can decelerate from here, and how low it can go. We also get a preliminary print of the August University of Michigan sentiment this week, which may continue to signal the pain inflicted on the consumer from the escalating price pressures. That will also include a gauge of inflation expectations for one year, as well as the longer term.
Japan’s July data will begin to show the fresh highs we have seen recently in Covid-19 cases, which are now reaching over a million per week. The Eco Watchers Survey for July will be due today, and likely to show deteriorating current conditions and expectations index. July producer prices are also due in the week, and will show some easing due to the base effects. However, underlying pressures remain amid the higher import costs due to the weaker yen, and consumer prices could continue to be pressured higher as well as firms pass on these rising costs.
U.S.: New York Fed survey of consumer expectations
Tuesday Aug 9
U.S.: Unit Labor costs (Q2) & Nonfarm productivity
Philippines: GDP (Q2)
Malaysia: Industrial production (Jun)
Thailand: Bank of Thailand policy meeting
Thursday Aug 11
U.S:. Initial & continuous jobless claims
U.S.: PPI (Jul)
Singapore: GDP (Q2, final)
Friday Aug 12
U.S.: U of Michigan consumer sentiment (Aug) & 5-10yr Inflation expectation
France: CPI (Jul, final)
U.K.: GDP (Q2)
U.K.: Industrial production (Jun)
Malaysia: GDP (Q2)
India: CPI (Jul)
India: Industrial production (Jun)
Sunday Aug 9-15
China: Aggregate financing (Jul)
BioNTech SE (BNTX:xnas), AIG (AIG:xnys), Tyson Foods (TSN:xnys), Suncorp (SUN:xasx), China Unicom (00762:xhkg)
Tuesday Aug 9
Coinbase (COIN:xnas), Warner (WMG:xnas), REA (REA:xasx), China Tower (00788:xhkg), Flat Glass (06865:xhkg)
Wednesday Aug 10
Walt Disney (DIS:xnys), Commonwealth Bank of Australia (CBA:xasx), Vestas Wind (VWS:xcse), Techtronic (00669:xhkg), Wharf (00004:xhkg), Lenovo (00992:xhkg)
Thursday Aug 11
NIO (NIO:xnas), Cardinal Health (CAH:xnys), Capitaland (9CI:xses), Telstra (TLS:xasx), QBE Insurance (QBE:xasx), Siemens (SIE:xetr), Deutsche Telekon (DTE:xetr), Hapag-Lloyd (HLAG:xetr), RWE (RWE:xetr), China Mobile (00941:xhkg), SMIC (00981:xhkg), Li Ning (02331:xhkg)
Friday Aug 12
Zijin Mining (02899:xhkg), Galaxy (00027:xhkg), Sands (01928:xhkg)
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.