Economic Analysis

The Reserve Bank of Australia and the Reserve Bank of New Zealand meet this week. Will they raise interest rates? How will Congress deal with the impending debt ceiling and vote on the infrastructure bill. Will the debt ceiling be raised before October 18? OPEC also meets this week amid a potential energy crisis. Will they increase the offer? Economic data this week will release the US Non-Farm Payroll and Canadian Employment Change!

central banks

The Reserve Bank of Australia and the Reserve Bank of New Zealand meet this week. At the last RBA meeting, despite the ongoing coronavirus shutdown, the RBA slumped as promised, from $5 billion a week to $4 billion a week. However, given the economic impacts of the latest bout of the virus, they also said they expect slower growth and higher unemployment. Therefore, they will keep bond buying at the current pace until at least mid-February 2022.

What about Tapering?

On the other hand, the Reserve Bank of New Zealand is expected to raise 25 basis points at its meeting this week, becoming the second central bank in the developed world to raise interest rates (Norwegian Bank raised rates last week) from 0.25% to 0.50%. New Zealand's central bank was poised for a rally at their August meeting, but sudden shutdowns from the coronavirus outbreak delayed the increase until October. After reading the stronger GDP expected for the second quarter, some speculated that the Reserve Bank of New Zealand could rise by 50 basis points, but central bank spokesmen quickly crushed that speculation.

America's political affairs

Last week, Congress averted a potential financial crisis by extending funding to the United States from September 30 through early December. This may allow Congress to address other potential financial issues, such as raising the debt ceiling. Treasury Secretary Janet Yellen said she expects to run out of US money on October 18. Although Senate Minority Leader Mitch McConnell has told Democrats they will have to "move on their own" through the reconciliation process, Democrats are reluctant to do so. Their reasoning: Both sides have raised the spending bill. Democrats don't want to be seen as solely responsible for raising the debt ceiling. This would surely be bad because of the conflict between Republicans and Democrats.

Another ugly battle is currently underway. However, this is an infighting among Democrats over President Biden's $3.5 billion welfare package. Some Democrats want to vote for infrastructure, such as roads, bridges and tunnels. These senators are seeking a smaller package for social issues, such as those proposed by Senator Machin and Cinema, which is worth just $1.5 trillion. Republicans are completely united against both bills, so Democrats will have to reach an agreement in order for the package to pass. There may be a vote this weekend.

Energy crisis?

Last week, the UK saw lines at 20-car-deep pumps due to supply shortages and bottlenecks. The government has said there is plenty of fuel in UK refineries. The problem is that they can't get enough drivers to deliver fuel to the gas stations. Recently, the government said it was seeing the first signs of a drop in demand. However, the Gasoline Retailers Association said that while a number of gas stations remain dry, that number is down from the 37% recorded on Tuesday last week. But they have not seen a drop in demand. The UK has issued short-term visas to truck drivers and has assistance from the military to help save fuel.

But is this just the beginning? Crude oil rose more than 9.5% last week, reaching a high of 76.67, while Brent crude rose by a similar amount, reaching a high of 80.06 last week. In China, there have been constant blackouts, forcing factories to close or reduce production. (This will increase supply chain problems.) why? Rising demand for electricity, rising coal prices, and government price controls. In addition, Europe has been hit by rising natural gas and energy prices. As the weather gets colder across Europe and the colder US during the winter, prices are expected to rise even more. Watch this week and throughout the rest of the year to see if markets can control prices as we approach the colder months in the northern hemisphere. OPEC meets on Monday. Will it be too early to increase production or will they wait to see more effects of the energy crisis to determine if more oil is needed?

Economic data

The big economic events this week are the OPEC+ meeting, the Reserve Bank of Australia meeting, the Reserve Bank of New Zealand meeting, and also the US Non-Farm Payroll and Canadian Employment Change on Friday. Powell noted that 750,000 was the average over the past three months. The forecast is to add another 500,000 jobs in September. These numbers will be closely reviewed. Canada expects +65.000 after rising +90200 in August. Other major economic indicators are as follows:

Monday

OPEC + . meeting

Canada: Building Permits

United States: Factory orders

Tuesday

Global Services PMI Finalist

Australia: Trade Balance

Australia: Final Sales part

Australia: Reserve Bank of Australia interest rate decision

European Union Producer Price Index

Canada: Trade Balance

United States: Trade Balance

US: Non-manufacturing PMI

United States: economic optimism

Wednesday

New Zealand: interest rate decision

Germany: Factory orders

EU: Construction PMI (September)

UK: Construction PMI (September)

European Union: retail sales

United States: Changing Employment

raw stock

Thursday

Germany: industrial production

United Kingdom: Halifax house price index

US: Challenger job cuts (September)

Friday

Australia: final building permits

Australia: RBA Financial Stability Review

Germany: Trade Balance

Canada: Employment Change

US: Nonfarm Payroll