Four Reserve Bank of Australia speakers are on the docket Monday and Tuesday but what they might say is unlikely to bolster local stocks at the open after Wall Street lost momentum over the weekend.
Jonathan Kearns, head of financial stability, and Marion Kohler, head of domestic markets, are scheduled to speak separately, followed by assistant governor (financial system) Michele Bullock and governor Philip Lowe on Tuesday. Dr Lowe will speak at the Australian Business Economists annual conference dinner in Sydney; "the market would certainly be interested in his assessment of recent wages and inflation reports", according to economists at NAB.
Initially though, Australian shares may tread water. ASX futures slipped 4 points or 0.1 per cent over the weekend. The Australian dollar dropped 0.3 per cent to US75.64??.
All three US benchmarks slid into the closing bell amid renewed concern that political scandals and infighting among Republicans could stall the Trump administration's tax reform push. The Dow shed 100 points, paced by Intel, Wal-Mart and Coca-Cola; the previous session Wal-Mart touched a record high after reporting unexpectedly strong sales growth.
A dearth of economic data may check markets ahead of the US Thanksgiving break on Thursday (Friday AEDT).
While the S&P 500 was 0.3 per cent lower, there's no sign of an imminent correction. The S&P 500 remains up more than 15 per cent so far this year.
It has now been 261 trading days since we've had a 3 per cent or more pullback in the markets, the longest such streak in history, according to Tematica Research.
"Underlying market fundamentals have been weakening, yet investor sentiment remains strongly bullish amidst record high margin debt and low cash reserves," said Lenore Hawkins, chief macro strategist at Tematica.
The US economy appears to be firing on all cylinders and that's helping bulls argue that stock valuations are not unreasonable. Housing starts leapt 13.7 per cent last month.
"Taken together, the recent data indicates that growth in the third quarter was well above 3 per cent, while current tracking suggests that the economy will expand by nearly 3 per cent in last quarter of the year," wrote TD Securities senior economist Michael Dolega.
In the days ahead, US existing home sales, durable goods orders and consumer sentiment reports are due. Fed chair Janet Yellen will appear for a panel this week, and minutes from the latest Fed policy meeting will be released.
"While the relationship between economic slack and inflation may not be as strong as it had been in the past, most [Federal Reserve policy committee] members believe it still exists," Mr Dolega said. "As such, the above potential growth should provide some comfort for the committee that inflation should over the medium-term converge to the 2 per cent target."
Fed fund futures point to near total consensus that rates will rise at the Fed's December meeting. The focus is increasingly shifting on where rates are headed in 2018.
BMO chief economist Douglas Porter said the "deep divide between raging asset prices and cool, calm, collected consumer prices leaves policymakers in a bit(coin) of a bind".
Mr Porter said "a flood of central-bank-inspired liquidity is clearly behind the strength in asset prices seen almost around the world".
"The greater mystery, and one that has been explored in depth by analysts and central bankers alike, is why consumer prices remain so stable," Mr Porter said. "Not to till a field that's already been worked heavily, but we would simply add that core CPI has been remarkably stable for more than a decade across the OECD.
"Expectations are seemingly locked in among developed economies at just under 2 per cent, through thick and thin. The current pace is 1.8 per cent, which just happens to line up with its 15-year average, and the range over that stretch has been well contained between 1.1 per cent and 2.4 per cent. And, to be clear, that stable inflation should be viewed as a massively positive development and not a problem to be solved."
