The political concerns that whipped markets around on Friday subsided over the weekend with Ukraine and Russia apparently talking and making some progress while in Iraq, Kurdish forces regained control of the key Mosul Dam from ISIS. Friday’s trading reminds us though that it’s important to not be complacent as markets can turn on a dime.
Asia Pacific markets started the week with a tepid performance, but European indices are on the rebound today with the Dax posting a 100 point rebound. Defensive plays are back on their heels with gold falling back under $1,300 and CHF dropping to the bottom of the forex league.
Even if the political situation cools, we could still see significant action in markets this week as focus turns back to monetary policy
. It’s a big week for central bank news. The highlight of the week is the Fed’s annual Jackson Hole, Wyoming conference, which starts Thursday. This conference is a high profile forum that has been used by Fed Chairs in the past to indicate policy direction and prepare the market for new initiatives.
FOMC Chair Yellen and ECB President Draghi speak on Friday followed by Bank of England Deputy Governor Broadbent on Saturday. There are also a number of significant events ahead of the conference including minutes and/or testimony from the Fed, Bank of England, Riksbank, RBA and more over the course of Monday through Wednesday.
In currencies today, the loonie continues to catch a tailwind from Friday’s improved employment numbers while GBP is also on the rebound. NZD continues to stabilize with some help from strong service PMI.
A takeover war is underway in the dollar store group. Dollar General has launched a $9.7B bid for Family Dollar. The $78.50 per share all cash price tops the existing $74.50/share bid from Dollar Tree.
Economic reports released overnight and this morning include:
Fitch Ratings upgraded Ireland to A- from BBB+ on an improved outlook for its economy and
China foreign investment (17.0%) vs street 0.8%
China new house prices (0.5%) vs previous (1.1%)
Eurozone trade balance €16.8B vs street €15.1B
UK house prices 5.3% vs previous 6.5%
NZ service PMI 58.4 vs previous 54.7
Singapore electronic exports (7.9%) vs street (15.9%)
Economic reports due later today include:
10:00 am EDT US NAHB housing market index street 53