15 September 2014
Ahead this week (high impact only). It’s a big one!
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+ NZ General Election Saturday.
# European stocks spent the session swinging between gains and losses before ending Friday’s trade unchanged from Thursdays close. For the week the Stoxx600 fell 0.95% as concerns surrounding the Scottish independence vote seeped across the channel. U.S. stocks meanwhile fell as the market prices in the assumption that this week’s FOMC meeting will be a hawkish event. With the retail sales data release bolstering this view the S&P500 fell 0.60% on the day. The big board broke a 5 week winning streak losing 1.10% over the course of the last week.
# The growing hawkish Fed view resulted in the 10-year US Treasury yield surging to 2.61% from Thursday’s close at 2.53%. The 10-year yield has risen 29 basis points over the past 10 trading days.
# Any concerns over a summer lull in U.S. consumer spending was dismissed with the release of the Retail Sales figures for August. Retail and food sales rose a seasonally adjusted 0.6% in August from July. Sales in July advanced 0.3% from June, up from an initial estimate that said spending had been flat. The better consumer spending is broadly in line with other recent economic indicators that have shown consistent employment gains and an uptick in credit-card and other consumer borrowing.
# ECB chief Draghi noted that the Eurozone recovery will continue at a modest pace, that the central bank is ready to take further action to maintain price stability and most importantly said the “ABS buying program will be significant”.
# S&P Greece upgraded from ‘B-‘ to ‘B’ on fiscal adjustment, outlook stable.
# China released a raft of data over the weekend with all releases coming in weaker than expected, rekindling fears of hard landing for the world’s no 2 economy. August Industrial Output fell to 6-year low, much worse than expected. The market was expecting +8.8% vs 9.0% in July and it came in at just +6.9%. August Retail Sales also missed, coming in at + 11.9% vs 12.1% expected whilst the Urban Investment figure came in +16.5% vs 16.9% expected. The weakness in the releases will no doubt see calls for more stimulus emerge and have many doubting the economy’s ability to register the 7.5% GDP target. The AUD/USD is modestly lower at the open this morning as a result.
# Gold continued to fall due to rising expectations of a hawkish Fed statement next week, closing near 1.0% lower at 1,228 and down 3.20% for the week. Crude prices remained very soggy with WTI Crude closing 0.60% lower for a fall of 1.09% on the week. Copper closed up 0.49% on Friday but closed the week 1.77% lower . Iron ore managed to edge up 10 cents to 82.00 but fell 1.20% for the week.
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