21 October 2014

Posted by Graham Parlane on 21 October 2014

Good morning

 

Ahead

# NZ Visitor Arrivals

# RBA Monetary Policy Meeting Minutes

# China GDP

# China Industrial Production

# China Retail Sales

# U.S. Existing Homes Sales

 

 

Overnight

# European stocks gave back some of Fridays hefty gains, driven by a profit warning from global giant SAP. With relative calm returning to the markets after last week’s rollercoaster rise, the EuroStoxx600 lost 0.52%. U.S. stocks put in a generally solid session, however the Dow underperformed due to a big earnings miss by IBM. The S&P500 (+0.91%) and the Nasdaq (+1.31%) were nicely bid but IBM shares slumped 7.3% consigning the Dow to a relatively weak +0.12% gain.

# Comments from Fed members Rosengren and Fisher point to the Fed ending the taper this month despite the volatility of last week (and the 4 week decline in U.S. stocks). Rosengren (dove) said he’s “in favour of ending QE this month unless something dramatic happens” whilst Fisher (hawk) said “No slide to downside on inflation- no pressure on upside either, recent market volatility has not changed outlook one iota” .

# Moody’s Investor Service reaffirmed Canada’s sovereign rating at AAA saying it reflected solid economic performance although household debt (like Aust. And NZ) is high.

# UK house price appreciation continues to ease back from heady levels, nationally prices rose  7.6%y/y, slightly down from the previous month. London house prices however, were up 7%m/m (seasonal oddity?) to be running at 9.6%y/y, enough to keep the BoE alert.

# Ahead of a raft of important data due this week (Aust., NZ and U.S. inflation, China GDP, China and Eurozone manufacturing) the USD was generally weaker in calmer trade as the dust settles from last week. A good degree of the huge USD longs built up in recent months must have been purged last week but none the less ‘dollar’ longs abound and new data will be needed to continue the USD trend higher.

# U.S. 10 year treasury yields slipped from 2.21% to 2.19% consolidating after the ‘flash crash’ of last week. Last week was notable for market expectations of the first Fed Funds rate rise being pushed out from mid-2015 to start 2016. Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. cut their year-end interest-rate forecasts at the end of last week, becoming the latest Wall Street firms to bow to the reality of falling bond yields among dimming global-growth projections.   Interest-rate strategists at Goldman Sachs said they expect the 10-year U.S. Treasury note's yield to end this year at 2.5%, down from an earlier estimate of 3%. J.P. Morgan said it expects the 10-year note's yield to end this year at 2.45%, down from an earlier 2.7% estimate.

# Gold rose over 1% as the likely delay to any Fed tightening cycle buoyed the precious metal on the basis that continuing low yields do not detract from Gold as an investment. Gold rose from $1,236 to $1.248.

 

Cheers G.

Graham Parlane - BBY (NZ) Limited, a specialist advisor in Futures - FX - CFD - Options - Shares - Gold - Silver - Commodities - Managed Accounts - DIMS

Tags: Equities, EuroStoxx, S&P, Trader, Broker, FX, Foreign Exchange, Futures, Futures trading, Currencies, Commodities, CFDs, CFD trading, Europe, FED, US, FOMC, BoE, UK, CPI, Inflation, USD, USDJPY, JPY, AUD, NZD, 10 year bond yields, Unemployment