Market movers today
We have no global tier-1 data set for release today. The euro area is due to release Sentix confidence, where we look for a small rise from an already high level.
Some central bank speakers will be out though. Tonight, the Fed’s Vice Chairman Bill Dudley (voter, neut ral) is due to speak. There has been speculation he might announce his own retirement , which would add to the turnover of FOMC officials coming up and make the future Fed policy stance more uncertain. Also, the ECB’s Peter Praet is due to speak today.
Overnight Japanese wage data and the rate decision from the Reserve Bank of Austral ia are due, but it will generally be a quiet week with no market movers in the euro area or the US. China is due to publish CPI/PPI and FX reserves and Brexit negotiations resume on Thursday.
In the Scandi region today, Swedish data for industrial production and orders will be released. For the rest of the week in Scandi, focus turns to the Riksbank minutes and Norwegian inflation. See more on Scandie markets on page 2.
Selected market news
Equities sold off and Asia-Pacific currencies generally weakened vis-à-vis USD after decent US data on Friday and as US President Trump on the first stop of his Asia trip in Tokyo complained regarding the US-Japanese trade relation, calling not least for greater Japanese investment in the US. Asian stock markets were also weighed upon by the Chinese central bank issuing concerns over excessive financial leverage in the country. USD/JPY rose to March highs following comments by the Bank of Japan’s Haruhiko Kuroda, stressing the need to overshoot the inflation target. Trump’s 11-day trip of Asia, visiting five nations, will take him to South Korea on Tuesday-Wednesday, which is most likely going to put tense relations with North-Korea at the top of the agenda.
Friday’s US data releases on th e wh ole came out on the strong side. The US job report showed some payback in October after the (at least partly) hurricane-related drop in job growth in September with non-farm payrolls rising by some 260,000. Average hourly earnings were weak at 0.0% m/m, but a key reason for this was that low-paid Americans, deterred from working due to hurricanes, returned to their jobs last month. Separately, the US ISM nonmanufacturing came in at 60.1, the highest level since 2005. The US e conomic data surprise index has notably seen a turn for the better recently and we expect this to continue into 2018, as our quantitative business -cycle framework continues to point to a US cyclical rebound over the next 3-6M. Overall, this supports the Fed’s case for a rate hike in December, and market pricing for a 25bp hike at that meeting was little changed, running just above 90%.
A further drop in the US rigcount and a consolidation of the powers of the Saudi Crown Prince Mohammed bin Salman over the weekend – and hence his call for OPEC output curbs to be extended at the upcoming meeting of the cartel – sent Brent crude to levels not seen since mid-2015, now trading above USD62/bbl.
