t's a sea of red this morning when I look at my screen with all the world’s major indices. Overnight news has been neutral to moderately positive so I think this action shows traders continuing to focus on next week’s FOMC meeting. Historically it’s been common for stocks to fall before the Fed starts raising interest rates and then start to rebound after the initial hike which Fed Chair Yellen and New York Fed President Dudley have indicated would be a show of confidence in the economy.
Today brings US retail sales, one of the last big US data announcements before the Fed meeting. Anecdotal reports from Thanksgiving weekend suggested okay traffic at the malls and strong online sales. I suspect though that a lot of the spending was on deeply discounted items so a miss appears possible. While the report could influence trading action today, I think it would take a really really poor result to knock the Fed off course given the recent comments from Fed members and last week’s strong employment growth. A weak number could be a sign of consumers anticipating the Fed to raise rates and holding back to see if it actually happens or not.
In currency markets today, USD continues to slip back a bit and may also be active on the retail sales report. EUR and continental currencies have been the beneficiaries this time. Resource currencies have been getting slammed with AUD leading the way to the downside along with NOK. Positive New Zealand data helped cushion the blow for NZD a bit while CAD appears to be stabilizing as well. Energy commodities and currencies could be active into the afternoon around the US drill rig count.
There have been no major corporate announcements so far this morning.
Significant announcements released overnight include:
Bank of Russia 11.00% no change as requested but signalled intention to cut rate at one of its next three meetings
China new Yuan loans 708B vs street 735B and previous 513B
China M2 money supply 13.7% vs street 13.4%
China foreign investment 1.9% vs street 0.2%
Germany wholesale prices (1.1%) vs previous (1.6%)
Germany consumer prices 0.4% as expected
Italy industrial production 2.9% vs street 2.0%
Italy unemployment rate 11.7% vs street 11.9%
UK construction output 1.0% vs street (1.1%)
UK BoE/GfK 12M inflation est 2.0% unchanged
NZ Business PMI 54.7 vs vs previous 53.3
NZ food prices (0.2%) vs previous (1.2%)
NZ ANZ consumer confidence 118.7 vs previous 122.7
Upcoming significant announcements include:
8:30 am EST US retail sales street 0.2%
8:30 am EST US retail ex auto street 0.3%
8:30 am EST US producer prices street (1.4%)
8:30 am EST US core PPI street 0.4%
10:00 am EST US consumer sentiment street 92.0
1:00 pm EST US Baker Hughes drill rig count previous 737
4:30 pm AEDT Sat China retail sales street 11.1%
4:30 pm AEDT Sat China industrial production street 5.7%
4:30 pm AEDT Sat China fixed assets street 10.1%
5:00 pm AEDT Sat China Bloomberg monthly GDP previous 6.57%
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