Market Movers ahead
- In the US, industrial production for September is due out. The first two months of Q3 have been on the weak side.
- Bank of England Governor Mark Carney, Deputy Governor Sir David Ramsden and MPC member Silvana Tenreyro are due to testify before the UK’s Treasury Committee on Tuesday. We will look for any hints on whether they have changed their minds on a November hike.
- It will be an interesting week in China, as the 19th Congress of the Communist Party begins on Wednesday. On the data front, we look for a small decline in GDP growth.
- In Denmark and Sweden, employment data releases for September are due out.
Global macro and market themes
- Global central bankers have been busy on the news wires. However, new research indicates that the accuracy of forecasting of financial and macroeconomic variables has not improved.
- The market will focus on what ‘QE path’ the ECB will choose on 26 October when the bulk of its decisions regarding the future of the QE programme are due to be disclosed.
- It seems that two ‘paths’ are on the table: either an extension for six months of EUR40bn a month in purchases or purchases for nine or 12 months of just EUR20-30bn a month.
- We believe for now in the first ‘path’ but acknowledge that the purchase constraints that make it increasingly difficult for the ECB to buy according to the ‘Capital Key’ makes a ‘longer’ but smaller monthly amount ‘path’ more likely.
