22 October 2014
# Australian Q3 CPI
# U.S. CPI
# Global stock markets soared, the memories of last week fading fast. Chinese data that was interpreted as better than expected (we view it as simply weakening), the implementation of the latest ECB easing plan and solid corporate earnings reports all served to buoy proceedings. The Stoxx600 rose a stonking 2.12% whilst stateside the S&P500 rose a similar 1.96%. Last week’s sharp declines have now been fully reversed. By session end the S&P had posted its biggest percentage gain in a year while it was the Nasdaq’s best since Jan 3.
# The EUR/USD was hit hard as the ECB’s began its asset purchase program. Evidence from Draghi’s quarterly testimony to European parliamentarians in Brussels, suggested that large-scale purchases of government bonds remain on track (confirmed that the central bank had bought Italian bonds) and that the buying of corporate bonds is also now likely. The EUR/USD sank from 1.2840 to 1.2715 and now looks set to resume its’ decline after several weeks consolidation. A number of EUR/USD sell recommendations were released overnight including by David Tepper, one of the best performing hedge fund managers on the planet, and by Citi NY.
# U.S. existing home sales raced to a one-year high in September. The National Association of Realtors said existing home sales increased 2.4% to an annual rate of 5.17 million units. That was above economists' expectations for a rise to a 5.10 million unit pace and more than reversed August's decline. Still, sales were 1.7 % below those for September of last year.
# With the S&P500 earnings season in full swing around 80% of companies have beaten (reduced) earnings expectations.
# Like equities, global bond yields continue to climb back from last week’s lows with the German 10-year yield pushing up from 0.82% to 0.87% and their US equivalents rebounding from lows below 2.14%, to sit at 2.20% currently.
Graham Parlane - BBY (NZ) Limited, a specialist advisor in Futures - FX - CFD - Options - Shares - Gold - Silver - Commodities - Managed Accounts - DIMS