The initial burst of liquidity euphoria Following Fed Governor Brainard's dovish speech Monday quickly faded. The Brainard Bounce turned out to be a bear market rally as traders recognized that her saying conditions for a rate hike being less compelling means that conditions previously were more compelling so the US economy and the prospects for corporate earnings must now be weakening.
Oil plus energy related stocks and currencies are getting hammered today with WTI and Brent both down over 2% and WTI trading back near $45.00. Overnight the International Energy Agency reported that world energy demand slowed more than expected this summer and forecast the supply overhang could continue through the first half of 2017 at least.
In currency markets today, USD is bouncing back, particularly against JPY and resource currencies like CAD and AUD even though overnight Chinese industrial production, retail sales and other economic reports were better than expected. GBP has also dropped back a bit as UK inflation figures came in lower than expected.
With no major corporate or economic reports due in North America today, traders may continue to react to yesterday's Fed comments and position for the big US retail sales and inflation reports due later in the week.
Energy markets may also attract particular focus between the IEA report and ahead of this week's API and DOE US oil inventory reports. Having such posted such huge drops of way over 10 mmbbls last week, it's quite possible we could see a bounce this week, the question is how much of a rebound?
There have been no major corporate announcements this morning.
China industrial production 6.3% vs street 6.2%
China retail sales 10.6% vs street 10.2%
China fixed assets 8.1% vs street 7.9%
UK consumer prices 0.6% vs street 0.7%
UK core CPI 1.3% vs street 1.4%
UK retail prices 1.8% as expected
UK producer input prices 7.6% vs street 8.2%
UK producer output prices 0.8% vs street 1.0%
UK house prices 8.3% vs previous 8.7%
Germany ZEW current 55.1 vs street 56.0
Germany ZEW expectations 0.5 vs street 2.5
Germany consumer prices 0.4% as expected
Sweden consumer prices 1.1% vs street 1.2%
NZ Food prices 1.3% vs previous (0.2%)
Australia NAB business conditions 7 vs previous 8
Australia NZB business confidence 6 vs previous 4
Upcoming significant economic announcements include:
There are no major announcements scheduled for North America today.
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