20 August 2014
# RBA Gov. Stevens speaks
# BOE MPC Official Bank Rate Votes
# U.S. FOMC Meeting Minutes
# Equity markets shrugged off reported intense fighting in Donetsk and renewed rocket attacks in Israel to carve out moderate gains for a 2nd day. More solid U.S. housing data served to further underpin markets. Gains on both sides of the Atlantic were of a similar magnitude, the Stoxx ending up 0.57% and the S&P up 0.50%. Once again volumes were particularly light, composite trading volume was just 4.8 billion shares, making it the third-slowest full trading day of the year.
# U.S. housing starts surged in July, climbing almost 16% to the highest level since November 2013. The data comes on the back of other recent upbeat housing related data including home construction which rose 22% in the year through July, and a rise in applications for building permits last month suggesting further gains this year. To be fair some of the sharp gains may be a catch up to the wet spring delays but none the less the data is undeniably upbeat.
# The latest U.S. inflation read showed U.S. prices climbing at the slowest pace in 5 months, levelling out at 1.9%. Meanwhile in the UK inflation fell more than expected in July as surging house price growth slowed in June, making it less likely the Bank of England will raise interest rates this year. Inflation dropped to 1.6% in July from June's five-month high of 1.9%
# The USD uptrend resumed, the USD Index (DXY) hitting 9 month highs after 2 weeks consolidating the prior month’s strong up move. With the Eurozone economy cratering as the core finally gives way, UK data peaking and inflation benign, Japan’s economy contracting last quarter, downgraded inflation and growth expectations from Australia and NZ’s economy losing steam the USD is winning the war by default although to be fair the U.S. labour market is clearly improving with many metrics at 12 year highs. The USD strength looks compelling indeed.
# U.S. 10 year bond yields inched higher on the strong housing data, settling at 2.40%, nicely above the 14 month low of 2.30% seen last week.
# Cameroon closes all borders with Nigeria in bid to halt Ebola virus
# WTI crude tumbled to a 7 month low whilst Brent fell to a new 14 month low. WTI for September delivery fell $1.93 to $94.48 a barrel
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