Commonwealth

Last week saw a number of important economic updates, with a focus on June’s inflation and retail sales reports. Retail sales were a highlight, as the pace of sales increased by more than expected during the month. This will be another busy week for updates, which will address the housing market, weekly initial jobless claims, and more.

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Australia has been one of the biggest beneficiaries of China’s growth in the past several decades. China’s infrastructure spending after the last two crises—the great financial crisis and the more recent COVID-19 pandemic—created a demand for resources that was largely fulfilled by Australia. Indeed, this demand helped alleviate some of the pain for the Australian economy.

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It was about three weeks ago that I ended the regular coronavirus updates as the medical news had improved sufficiently that the country had largely reopened and the virus was under control. Since then, unfortunately, we have seen infections tick back up, and it is clear that—from a medical perspective—the virus is still with us. Thus, this update discusses where we are now and what it might mean going forward.

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As regular readers know, I largely steer clear of politics. Political beliefs are largely beyond argument (on both sides), so it’s not a good use of time to put out arguments that go against someone’s convictions. Yet, in economics and markets, we do have to deal with the facts, as we saw recently with the pandemic. Regardless of where you stand on the vaccine, for example, the facts are what they are. And that is where we now find ourselves with climate change.

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My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam!

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Last week was relatively quiet in terms of economic updates, with only three major data releases. In June, service sector confidence remained in healthy expansionary territory despite a slightly larger-than-expected pullback for the ISM Services index during the month. This week will be packed with updates, with June’s inflation and industrial production reports and the first look at consumer sentiment in July serving as highlights.

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