The early part of the week may be dominated by the latest US-China trade talks fallout, while the latter half shifts its focus to August’s flash PMIs.
US
It hasn’t been a good 2020 for US-China relations. Things may have started with the signing of the ‘phase one’ trade deal, but it has only been downhill since then.
There’ve been the constant attacks by Trump over covid-19, discord over the treatment of Hong Kong, the tit-for-tat closing of consulates in Houston and Chengdu, the bans of US transactions to TikTok and WeChat parents ByteDance and Tencent (HK:0700), praise for Taiwan from Washington, and sanctions placed on 11 Chinese officials and the same number of US citizens.
Now the markets are facing the fallout of Saturday’s videoconference check-in. It’s an event that could see disagreement over China’s previous commitment to buy $200 billion-plus US goods and services across 2020 and 2021. As for progress on ‘phase two’ of a trade deal, that might be incredibly hard to come by given the cold war vibes of the last few months.
Beyond the US-China situation and, of course, the latest covid-19 headlines, the week is back-weighted data-wise.
Monday sees the Empire State manufacturing index, followed by building permits and housing starts on Tuesday, and the FOMC meeting minutes on Wednesday. Moving onto the juicier stuff, Thursday’s jobless claims reading – which has finally fallen below 1 million for the first time in 21 weeks – is followed by the flash PMIs on Friday.
The most recent readings have the manufacturing and services sector edging back towards growth, at 50.9 and 50.0 respectively. Investors will desperate for a further improvement from both.
UK
Keeping a watchful eye on the domestic covid-19 situation, including the ever-changing state of the travel corridor, there’s a decent amount of data for UK investors to work with in the latter half of the week.
Inflation, which currently stands at 0.6%, is released on Wednesday, followed by the CBI industrial order expectations on Thursday. Perhaps most importantly on Friday is the retail sales reading for July. In June they were up a far better than forecast 13.9% – can the trick be repeated once again, after the nation saw lockdown continue to ease?
Eurozone
Over in the Eurozone there’s a Eurogroup meeting on Monday, region-wide current account and inflation figures on Wednesday, the most recent ECB monetary policy meeting accounts on Thursday, and the French, German and Eurozone-wide flash manufacturing and services PMIs on Friday.
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