Trade, Brexit, Italy, Argentina
Nothing really new emerged over the weekend, it was just more of the same from the traditional flashpoints. Trump upped the ante on Chinese tariffs. Johnson threatened rebellious Tories with P45s. Italy's new coalition looked rocky. Argentina reintroduced capital controls. And currencies took it all in their stride.
The imposition of 15% import duties on $112 billion of US imports from China might not have improved global economic sentiment but it came as no surprise. Although, almost out of a sense of duty, investors took the safe-haven yen to the front of the field, the "risky" antipodean dollars are close behind in second place. In London, the Prime Minister let it be known that Conservative MPs will be fired if they vote against a no-deal Brexit. Almost nothing from Downing Street surprises investors nowadays and sterling is on average almost unchanged on the day. It added a third of a euro cent and lost a quarter of a US cent.
In Rome, Giuseppe's inchoate coalition has already come under pressure from one of its two partners, Five Star leader Luigi Di Maio threatens to force an early election if his policy demands are not met. And in Buenos Aires, President Mauricio Macri has reimposed capital controls after the peso lost more than a quarter of its value in August.
Elusive growth, low inflation
A lengthy list of end-of-month ecostats tended to confirm what investors already suspected about the major economies. Inflation remains stubbornly low, despite the best efforts of central bankers, and gross domestic product growth is in most cases nowhere near its pre-financial-crisis levels.
There were inflation data from Spain (0.3%), Germany (1.0% or 1.0% depending on whom you ask), Tokyo (0.6%), France (1.2%), Italy (0.5%) and the euro zone (provisional 1.0%). The GDP readings came from Norway (quarterly 0.3%), France (0.3%), Italy (0.0%), the United States (0.5%) and Canada (0.9%).
Some other statistics also attracted the interest of investors. Euroland consumer and business confidence was mostly a little better in August. UK consumer confidence fell three points to -14. Japanese retail sales fell 2.3% in July. Australian building permits plunged 9.7% in July and were down by 28.5% from the same month last year.
PMIs and the RBA
The usual first-of-the-month flurry of manufacturing sector purchasing managers' indices will be a little less hectic than usual on account of the Labor Day holiday in the United States. Tonight the Reserve Bank of Australia is expected to keep its Cash Rate benchmark unchanged at 1.0%.
Manufacturing (x2) and services PMIs from China are already out, at 49.5, 50.4 and 53.8 respectively. Australian manufacturing showed no clear trend while Japan deteriorated slightly to 49.3. Sweden improved fractionally to 50.4.
All but one of the manufacturing PMIs from Europe are forecast to be below the breakeven line at 50: France is expected to be unchanged at 51.0. The predicted 48.4 from Britain, if correct, would be towards the top of the bunch. Tonight brings the BRC's measure of like-for-like retail sales.