Market movers today
Euro-area retail sales are expected to rebound in September after a 0.5% drop in August; consumer confidence is at the highest level in 20 years pointing to continued robust consumption.
Chinese FX reserves are due today but no time of the release has been announced. The reserves are expected to be broadly flat and have not attracted much attention since capital out flows stabilised again in spring 2016.
Tonight, Fed Chairman Janet Yellen will speak at an event where she will be given an Award for Ethics in Government. However, we do not expect her to say anything about the monetary policy out look in her speech, and indeed as she steps down in February, her speeches are getting less important by the day.
The US House of Representatives’ tax-writing committee continues to work on a tax reform with a proposal possibly due by the end of the week, but markets will stay alert to progress on this issue to sense how wide raging it will be.
US President Trump arriving in Seoul, South Korea, could put focus back on geopolitical tensions with North Korea.
It is time for Norwegian industrial production. More on Scandi markets, page 2.
Selected market news
Risk appetite remains decent with notably energy stocks lifted by a continued uptick in oil prices with the price on Brent crude topping USD64/bbl. The main driver behind the most recent oil spike seems to be rising tensions around Iran’s missile programme with UAE and Bahrain yesterday backing Saudi Arabia in saying that tackling the programme is an urgent priority. The ongoing purge launched by the Saudi Crown Prince bin Salman also seemingly continued to provide support to oil supply worries. Separately, the prospect of a Broadcom- Qualcomm tie-up also helped to lift notably tech stocks. US yields edged lower during the day led by the long end of the curve with the 10Y Treasury yield firmly below 2.35% again. Separately, Fed’s Vice Chair Dudley announced that he will retire in mid-2018, which is somewhat earlier than expected, heightening uncertainty with respect to Fed policy .
Overnight, the Reserve Bank of Australia (RBA) as expected kept its cash target rate unchanged at 1.50%. The RBA noted that investment is picking up outside of mining but issued worries over household consumption, which remains low due to still subdued wage growth. Also this morning, data on Japanese wages for September was released, showing overall wage growth at 0.9% y/y. Although up from a (revised lower) 0.7% last time, the details showed that this is due mainly to part -time workers seeing salary increases. This limits the impact on inflationary pressure more broadly and in our view means there is still a long way before the Bank of Japan will see the overshoot of its inflation target it was again stressing its devotion to earlier this week. USD/JPY is slightly higher.
