02 Sep 2019
UK this week
In the UK, parliament sits again on Tuesday after its summer recess, following news of its prorogation from 9-12 Sep until 14 Oct, when the Queen’s Speech will be held.
We will be on the lookout for news of any progress in UK/EU talks to alter the Irish backstop which will essentially determine whether the UK leaves the EU with or without a deal. On the BoE side, the MPC will appear at the Treasury Committee on Tuesday, after which Mark Carney will give evidence on Brexit.
US this week
Globally, markets will be sensitive to trade news from the US and China as a new round of tariffs kicked in yesterday. At the time of writing there did not appear to be material progress towards organising a new round of face to face meetings between senior officials between Washington and Beijing. However, it is not impossible that this situation shifts during week.
Attention will be turned to August’s jobs data on Friday, the final employment number ahead of the 18 Sept FOMC meeting. We suspect the figures could be boosted by Census hiring and our call is for a 190k gain in payrolls. We also see the (U3) unemployment rate edging down again to 3.6%. As well as the usual run of ISM and ADP data earlier in the week, the Fed’s Beige Book will be published on Wednesday evening, giving the Fed an impression of conditions in the economy ‘on the ground’.
Europe this week
In the Eurozone, we will be on the lookout for hints from ECB members ahead of the 12 Sept Governing Council meeting, before its ‘quiet period’ begins later in the week. German manufacturing orders and industrial production are due on Thursday and Friday.
Our assessment is that production has now adjusted downwards to reflect order books and may have troughed. If this is not the case, there is a real risk that the economy has entered a recession.
In Italy, we should learn of the key ministerial appointments from the new 5*/PD government, though still under PM Giuseppe Conte. We note that Land elections take place on Sunday in the German states of Brandenburg and Saxony.
09.00 EU Manufacturing PMI
09.30 UK Manufacturing PMI
US Public Holiday: Labor Day