Your Monday morning update, with added taper talk goodness:
– The Fed’s taper – or not – is going to dominate trade for the first few days in Markets this week until we get the FOMC decision at 4am EST Thursday. There is a lot of market time between then and now, and in Australia we have the release of the RBA Board minutes at 11.30am tomorrow to contend with as well. Trade is potentially going to be thin and whippy.
– Looking back to Friday, it seems markets reckon they know what the Fed is going to do and are content it will be nothing radical. While no one knows exactly what to expect, the market does seem to have settled on a small taper of around $10 billion and clear guidance that rates will stay low for a while yet. This doesn’t seem to be worrying stocks, which were higher in the US – the Dow, S&P and Nasdaq all finished higher at 0.49%, 0.16% and 0.27% in the black respectively.
– In Europe, the FTSE was marginally lower on Friday but still had a positive week while the DAX, CAC, FTSEMIB and IBEX were all higher, but no gain was more than 0.2%.
– In Australia, the SPI200 contract closed on Saturday a little stronger at 5238, suggesting an increase on the open this morning for the ASX.
– On rates markets, the weaker-than-expected US retail sales (+0.2% total v +0.4% expected and +0.1% ex autos v 0.3% expected) helped US 10’s finish a little stronger at 2.89%. Bunds closed at 1.98% and Gilts at 2.74% as all anticipate a less aggressive taper.
– The US and Russia have sorted out a plan to remove chemical weapons from Syria which is good news all around, but that wasn’t the news that knocked Gold for six on Friday. You can put that down to a Nikkei report that Larry Summers was going to Chair the Fed. We now know that won’t happen, after Summers’ shock withdrawal from the race just this morning. The Low was $1304 oz but gold recovered over the course of the day to close $1325 at week’s end. In other Commodity news, Crude was quiet but still elevated at $108.63 Bbl, while Copper was barely unchanged at $3.23 lb. The Ags were at it again with Corn absolutely tanking with a 6% drop after the USDA increased its latest crop forecast. Soybeans (+3.25%), however, went the other way as a late season drought drove prices higher. Wheat fell a relatively subdued 2.18%.
– On FX markets, the Aussie (0.9238) traded a narrow range while GBP (1.5875) continued its rally as the Euro (1.3292) finished mid-range. Against the Yen, the USD lost ground as well, closing the week at 99.34.
– On the data front today, Westpac’s Consumer survey will be out in New Zealand. It’s a holiday in Japan which will depress volumes, Inflation data in India is out later on and then in Europe tonight we get Italian trade and EU CPI before NY Empire Manufacturing and US industrial Production data.
Nothing of note here at home.
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