Key events to watch in the week ahead: 5 – 11 August 2024
What are some of the key events to watch next week?
![Federal Reserve](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/news-article-image-folder/GT_fed_18-04-24.jpg/jcr:content/renditions/original-size.webp)
This week’s overview
Major US indices seem set for its third straight week of declines, as weaker-than-expected US economic data raised the question of whether market participants are getting ahead of themselves in pricing for a soft-landing. This comes at a time where the Federal Reserve (Fed) has yet to ease up on its monetary policies and the rates environment remain very much in restrictive territory.
Ahead, eyes will be on the US non-farm payrolls data for July to round up the week. If it tracks the recent run in weaker-than-expected economic data out of the US, it may further exacerbate concerns around a hard landing. Expectations are for softer US labour conditions to continue, with consensus looking for 175,000 job additions for July, down from previous 206,000. The US unemployment rate is expected to stay steady at 4.1%.
US earnings season: Palantir, Caterpillar, Super Micro, Airbnb, Disney
With much of the megacap tech earnings behind us (except Nvidia on 28 August), the US earnings season may see some winding down over coming weeks. That said, several earning releases remain in focus next week, such as Palantir, Caterpillar, Super Micro, Airbnb and Disney.
Thus far, earnings outperformance has been holding up, on par with previous quarters. As of today (1 August 2024), 63% of S&P 500 companies has released their results, with 79% beating earnings expectations.
![US Earnings Date](http://a.c-dn.net/c/content/dam/publicsites/sgx/images/rangeofmarkets/SGX_USEarningsDate_020824.png/jcr:content/renditions/original-size.webp)
5 August 2024 (Monday, 7.50am SGT): Bank of Japan’s (BoJ) monetary policy meeting minutes
At the recent policy meeting, the BoJ hiked its policy rate to around 0.25% from a range of 0 to 0.1%, its second rate increase this year. The central bank also offered more clarity on its quantitative tightening (QT) plan, which is to reduce its monthly pace of bond buying to around ¥3 trillion by the first quarter of 2026.
Current market rate expectations are looking for the BoJ to hike rates further by the end of this year, given the outright guidance from BoJ Governor Kazuo Ueda that the BoJ is open to continuing raising rates if the economy and prices move in line with the outlook. He also mentioned that “the real interest rates is at a very low level” despite the recent hike.
More clarity around policymakers’ thinking behind the 7-2 majority vote to raise rates in July may be sought from the minutes, with the risks of higher inflation and stronger wage growth likely to be brought up as a crucial factor behind the decision.
![BoJ policy rate](http://a.c-dn.net/c/content/dam/publicsites/sgx/images/rangeofmarkets/SGX_BoJPolicyRate_020824.png/jcr:content/renditions/original-size.webp)
5 August 2024 (Monday, 10pm SGT): US Institute for Supply Management (ISM) services Purchasing Managers' Index (PMI)
Last month (June), the ISM Services PMI dived to 48.8 from 53.8 prior for its sharpest contraction since Covid. Across the sub-indices, Business activity, New Orders and Employment all declined. Survey respondents noted that, in general, business is flat or lower, and although inflation is easing, some commodity prices were significantly higher.
This month (July), the market is looking for a rebound to 51, back into expansionary territory, which would help ease slow-down concerns.
![US ISM Manufacturing & Services PMI](http://a.c-dn.net/c/content/dam/publicsites/sgx/images/rangeofmarkets/SGX_USISMManufacturingServicesPMI_020824.png/jcr:content/renditions/original-size.webp)
6 August 2024 (Tuesday, 12.30pm SGT): Reserve Bank of Australia (RBA) interest rate decision
As widely expected, the Reserve Bank of Australia kept its official cash rate on hold in June at 4.35% for a fifth straight meeting. However, the accompanying statement and press conference by RBA Governor Bullock sounded hawkish.
The Governor noted that the Board debated between a hike and a hold and sounded more cautious, noting that "the narrow path is getting narrower" and that "a lot needs to go our way." The return of a comment at the end of its post-meeting statement that the RBA "will do what is necessary" to achieve a return of inflation to target reinforced its hawkish bias.
During the press conference in May, Governor Bullock emphasised the importance of the June quarter inflation update: "Yes, the quarterly CPI will be important", which this week provided a welcome mix of cooler inflation readings.
Specifically, the RBA's preferred measure of inflation, the trimmed mean rose by 0.8% in the June quarter (consensus was +1.0%), allowing the annual rate to fall to 3.9% from 4.0% prior, locking in a sixth quarter of lower annual trimmed mean inflation.
The cooler June quarter core inflation reading increases confidence that inflation can end the year at or close to the RBA's forecast of 3.4%, While the RBA's messaging is likely to remain hawkish and be accompanied by modest lifts in inflation and targets, we expect the RBA to stay on hold next week at 4.35% before a first rate cut in December.
![Graph of the Cash Rate Target](http://a.c-dn.net/c/content/dam/publicsites/sgx/images/rangeofmarkets/SGX_CashRateTarget_020824.png/jcr:content/renditions/original-size.webp)
9 August 2024 (Friday, 9.30am SGT): China’s July inflation rate
China’s June inflation numbers came in lower than expected, with consumer prices edging down to 0.2% year-on-year from 0.3% prior. A subdued consumer price index (CPI) for the fourth straight month continues to point towards weak domestic demand in the world’s second largest economy, with prices dragged lower across various categories ranging from vehicles, household appliances, communication devices and rents.
Producer prices were slightly more favourable, registering its smallest contraction since February 2023 at -0.8% year-on-year. That said, soft inflation figures remain a sign of broader economic weakness, which could explain the People's Bank of China (PBOC)’s recent decision to lower its seven-day reverse repo rate, as well as both the one-year and five-year loan prime rates. Any fall in consumer prices back into deflationary territory may further raise the case for further monetary policy easing.
![China's CPI and PPI figures](http://a.c-dn.net/c/content/dam/publicsites/sgx/images/rangeofmarkets/SGX_ChinaCPIAndPPIFigures_020824.png/jcr:content/renditions/original-size.webp)
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