Overnight Points of Interest

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team Graham Parlane

28 August 2014

Posted by Graham Parlane on 28 August 2014

Good morning

Ahead

# Australian New Home Sales

# Australian Private Capital Expenditure

# German CPI

# U.S. Q2 GDP Revision

# U.S. GDP Price Index

# U.S. weekly Unemployment Claims

# U.S. Pending Home Sales

Overnight

# More weaker European economic readings overnight but this time the Stoxx600 failed to benefit (on expectations of more ECB stimulus) pausing after a nearly 2% rise so far this week. The pan-European index ending up marginally by 0.11%. Likewise U.S. stocks ended a quiet session little changed, indeed the S&P500 ended dead flat at 2,000. Trading was the slowest for any full session this year, with the Dow trading in its third-narrowest range this year, and moving just 44 points between its high and low. The S&P 500 traded in

its seventh-smallest range this year. It’s the last week of holidaying in the Hamptons for Wall St kings so it will be interesting to see the sentiment when traders return in force given the latest leg of this rally has been built on particularly light volumes.

# The monthly GfK survey of German consumer confidence showed confidence falling to 8.6 in September from 8.9 in August, against a forecast rise to 9.0.  It was the first decline in the consumer climate indicator since January 2013. The potential turn in consumer sentiment comes at a particularly worrying time for Germany. The economy, which had been an anchor of growth for the struggling euro zone, contracted by 0.6% in annualized terms in the second quarter, as domestic demand couldn't offset a drag from net exports.

# The  French jobless total rose by 26,100 in July to record 3.424m

# The USD was broadly weaker giving back a touch of its recent sharp gains. The USD lost about 0.2% as investors eye the forthcoming Eurozone inflation data (just +0.3% annualised expected against a target of 2.0%) for cues to whether Draghi’s Jackson Hole hints of more policy easing will be effected. German Finance Minister Schaeuble added to the debate saying  Draghi comments on the growth-austerity debate have been ‘over interpreted’. His comments lifted the EUR/USD from new 11 month lows of 1.3352 seen yesterday to 1.3195

# Global bond yields fell across the board, a potentially worrying signal as to global growth prospects. German 10-year bond yields fell to a fresh all-time low of 0.91%. Yields in France, Italy, Spain and Portugal followed suit, hitting record lows. Stateside the benchmark 10 year bond yield fell back 5 pips to 2.35% and within spitting distance of 1 year lows.

Cheers G.

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