Overnight Points of Interest

Posted by Graham Parlane on 7 November 2014

Good Friday morning

Ahead

# RBA Monetary Policy Meeting Minutes

# U.S. Non-farm Payrolls

# U.S. Consumer Credit

# China Trade Balance

# AB’s convincingly put away the Pom’s

Overnight

# European stocks edged higher, the move somewhat underwhelming, given the ECB formalised their intention to move toward full blown QE. The Stoxx600 ended up just 0.21%. U.S. bourses are up to a similar degree, pushing to yet more record levels as we approach the close. The ECB move and more solid U.S. labour market data buoyed sentiment. The S&P500 is up 0.24 and at records 30 minutes out from session end.

# Recent reports of ECB President Draghi being at odds with his ECB governing council peers was dispelled for now as the ECB formalised its intention to increase the ECB’s balance sheet toward its early-2012 levels – an expansion of about €1tn from the €2tn level today. There was some doubt about whether the Governing Council would back such an explicit target. Rebuking the recent chatter the council said it was “unanimous in its commitment to using additional unconventional instruments within its mandate.” The EUR/USD was hit over 100 points from above 1.25 to below 1.24 in response.

# UK industrial production and manufacturing production were both reasonably upbeat coming in at +0.6% (+0.4% exp) and +0.4% (+0.3% exp) respectively yet GBP/USD actually fell more than the EUR.

# More great U.S. labour market news with weekly jobless claims coming in at their 2nd lowest level of the year and the smoother 4 week moving average registering its lowest level since 2000. Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 278,000 for the week. The four-week moving average of claims, fell 2,250to 279,000.

# U.S. treasury yields inched higher to their best levels since early October and well above the ‘flash crash’ low of 1.86% of 15 October (I wonder how many trading firms lost their long term positions then?) reaching 2.38% in U.S. trade. The 10-year German bund slipped slightly to 0.822% whilst the 10-year Japanese government bond yielded 0.47%.

# U.S. crude futures slid for a fifth time in six days after OPEC cut forecasts for the amount of oil it needs to supply and the dollar strengthened. West Texas Intermediate fell as much as 2%. OPEC lowered every published forecast for its crude demand through 2035 except next year. Oil also dropped as Libya said it will resume pumping crude “soon” at its biggest field. By session end WTI for December delivery slid 63 cents, or 0.8% to $78.05 a barrel.