Central bank watch: Don’t be soured by sentiment. The RBA won’t be.
Consensus appears to have shifted towards the idea that weakness in consumer and business confidence provides justification for RBA easing. We have reservations being “roped into the herd” on the grounds that: the “two-speed” economy is, in large part, by design; and “causality” runs from commodity prices to inflation to the RBA to confidence (not the other way around). The RBA’s own research department appears to agree with us.
Strategy: United States Treasuries – Deja vu
The market has not only re-priced fed funds expectations, it also seems to be pricing in another round of large-scale asset purchases. We believe investors looking for a confirmation at the upcoming Jackson Hole symposium will likely be disappointed.
Economics: Australia – Keep your eyes on the PMIs
We model the factors driving Australian commodity prices and, by extension Australian economic growth and interest rate decisions. We found that: 1) rises in the US and China PMIs have a substantial impact on Australian commodity prices, while the eurozone PMI seems to exert little influence; and 2) expansionary monetary policies in the eurozone and the US appear to have a positive impact on Australian commodity prices, while Chinese monetary policy seems to have little noticeable impact.
Economics: China might not be able to repeat 2008’s intervention measures
While the Chinese policymakers may soon reverse their policy tightening if the global economy weakens significantly, it is unrealistic to expect the Chinese government to repeat what it did in late 2008.
Economics: Very sharp deterioration in US Philly Fed survey
The Philadelphia Fed manufacturing index declined sharply in August, to -30.7 from 3.2 in July, well below expectations. Looking at the history of the series, a reading below -20 is rare outside of recessions.
Commodities: Japanese thermal coal imports should start to recover gradually
In our view, thermal coal imports to Japan, Australia’s largest thermal coal customer, will most likely not start to recover until Q4 2011.
Commodities: The importance of China and emerging markets
Emerging markets in general are far more deterministic of the oil demand trajectory and any worsening in the conditions here is where the risks to fundamentals lie.
Technical analysis
Several base metals rebound from the 2011 lows which are important benchmarks to monitor for signs of commodity and commodity currency buoyancy in general.
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http://www.easyforexnews.net/wp-content/uploads/2011/08/Australia_and_New_Zealand_Weekly.pdf
BARCLAYS CAPITAL
ECONOMICS RESEARCH