Overnight Points of Interest


team Graham Parlane

27 August 2014

Posted by Graham Parlane on 27 August 2014

Good morning


# Australian Construction Work Done

# Australian New Home Sales

# Australian Private Capital Expenditure

# German CPI


# European stocks continued to move sharply higher on increased optimism that the Draghi led ECB will ride over the hill to the rescue of the Eurozone with new policy support, potentially as soon as next week. Draghi’s Jackson Hole speech has the market thinking that full-on quantitative easing could be on the way for the region in an effort to fight off the threat of deflation. The Stoxx600 backed up yesterday’s strong move with another solid 0.73% gain. Meanwhile U.S. stocks edged higher, not taking full advantage of what was some seriously good U.S. data, perhaps due to central bank developments. The S&P500 has for the first time ever closed above 2000 (just) with a gain of 0.11%.

# U.S. Consumer Confidence pushed up to its highest level since October 2007, a significant reading given the high correlation between confidence survey’s and GDP outcomes (forwarded 5-12 months). The Conference Board said its index of consumer confidence increased to 92.4 in August from a revised 90.3 in July. Economists had forecast the index to fall to 88.5. The rise was the 4th consecutive monthly improvement.

# The Case-Shiller House Price report showed U.S. house prices continue to rise, albeit at a slower pace than previously. The home price index covering the entire nation increased 6.2% in the 12 months ended in June whilst the 20 major-city price index was up 8.1%.  A number of economists opined that seasonal adjustments may have made house prices appear artificially weak in June-November.

# Perhaps the most important price of news to emerge in the offshore session, and potentially why U.S stocks aren’t higher,  was the revelation that the Philadelphia, Kansas City and Dallas Federal Reserve Banks renewed requests to raise discount rate to 1% pre the July FOMC meeting. Whilst we knew a significant shift has been underway at the Fed, away from ‘lower for longer’ to realising that they are somewhat closer to obtaining their dual mandate goals (and thus normalising policy), these requests are at the pointy end of market expectations for rates. The news should only serve to further support the current USD rally.

# An extraordinary U.S. Durable Goods Orders release was seen with Boeing’s outstanding aircraft sales following the annual UK air show. The headline figure jumped by the most on record as bookings surged for commercial aircraft. Bookings for goods meant to last at least three years climbed 22.6% after a 2.7% gain in June that was bigger than previously reported. The median forecast estimated orders would climb 8%. Further, bookings for motor vehicles climbed by the most since August 2009. However  the ‘core’ reading fell -0.8% after a 3% rise the previous month.

# China’s Premier says confident of maintaining Medium to high-rate of growth. If he said it then it’s going to happen!

Cheers G.

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