After spending the first part of the week grasping for news to trade on, the market's appetite for news has been more than filed overnight with a lot more on the way from the US.
Stock markets remain choppy on a combination of seasonality and uncertainty over where interest rates are heading with traders wondering if the easy money party is coming to an end. US index futures are up 0.3% trying to rebound from yesterday's late slide, while major indices in Europe are flat this morning. The Nikkei fell 1.2% while the Hang Seng rose 0.7% in Asia Pacific trading.
Commodity markets are even more active again today. After being taken down hard to the mat over the last two days , crude oil is starting to rebound with WTI up 1.0% but still short of $45.00N and Brent up 1.2%. A witches brew of speculation on more production about to come on stream from Nigeria and Libya, lower demand forecasts from the IEA, mixed inventories from the US where good crude headline numbers were offset by higher inventories of refined products (gasoline and distillates) and speculation on the upcoming side meeting between Russia and OPEC countries may keep the bot boiling for a while yet.
Meanwhile, copper is soaring today, rallying 2.6% as traders view better than expected lending, retail sales and industrial production reports for China this week as favourable for resource demand.
Central banks are also in focus today. The Swiss National Bank kept its benchmark rates steady in negative territory. The SNB cut its inflation forecasts, threatened to intervene in forex markets if needed and indicated Brexit risks to the economy, all in a typical day's work. Meanwhile, another smoking hot UK retail sales report and a smaller than expected Eurozone trade surplus has me thinking that Continental Europe may be more at risk from Brexit than the UK especially with GBP having dropped so much earlier this year.
The Bank of England stayed the course at its meeting today in a unanimous decision which is not a surprise considering they cut rates and increased asset purchases last month but they did leave the door open to another rate cut this year, likely to fight off criticism of its recent actions. Today's spectacular retail sales report suggests if anything the Bank of England has probably overdone it on stimulus already. Two members of the MPC appear to be thinking the same (Forbes and McCafferty) but also recognize the cost of changing the decision now would be too high. It does suggest, however, that any additional attempts at adding to UK stimulus would likely run into a lot more opposition.
With two more central banks essentially in neutral, focus now turns to the Fed and Bank of Japan meeting next week. Reports suggest the BOJ may be looking at a small push deeper into negative territory to (0.2%) from (0.1%). Considering that JPY has been rising into the meetings, such a move likely won't be enough to stop the US Fed from raising rates or signalling a December hike.
Today brings a flurry of announcements while may influence Fed speculation. Retail sales and industrial production are the headliners, but regional reports like Empire Manufacturing may attract attention as well if there are any surprises.
There have been no major corporate announcements this morning.
Bank of England meeting no changes to 0.25% interest rate or £435B asset purchase target as expected, 9-0 vote but two members having second thoughts about QE
Swiss National Bank meeting no changes to deposit or lending rates as expected
UK retail sales 6.2% vs street 5.4% vs previous 5.9%
UK retail ex auto 5.9% vs street 4.8% vs previous 5.4%
Eurozone trade balance €20.0B vs street €22.0B
Eurozone consumer prices 0.2% as expected
Eurozone core CPI 0.8% as expected
NZ BusinessNZ manufacturing PMI 55.1 vs previous 55.8
NZ GDP 3.6% as expected vs previous 2.8%
Australia employment change (4K) vs street 15K vs previous 26K
Australia full-time jobs 11K vs previous (45K)
Australia part-time jobs (15K) vs previous 71K
Australia unemployment rate 5.6% vs street 5.7%
Upcoming significant economic announcements include:
8:30 am EDT US retail sales street (0.1%)
8:30 am EDT US retail ex auto street 0.2%
8:30 am EDT US jobless claims street 265K
8:30 am EDT US Empire manufacturing street (1.0) vs previous (4.0)
8:30 am EDT US Philadelphia Fed street 1.0
8:30 am EDT US producer prices street 0.1%
8:30 am EDT US core PPI street 1.0% vs previous 0.7%
9:15 am EDT US industrial production street (0.2%)
9:15 am EDT US manufacturing production street (0.3%)
10:30 am EDT US natural gas storage street 55 BCF
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