Top Things to Know Today - page 22
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After holding off on a rate hike last week, the Fed is keeping itself in the market's sights, with Fed Chair Janet Yellen testifying before the House Financial Services Committee on regulation and supervision Wednesday at 10:00AM ET (14:00GMT).
On Thursday, Yellen is due to speak via videoconference at the Minority Bankers Forum in Kansas City at 4:00PM ET (20:00GMT).
Her comments will be monitored closely for any new insight on policy. Last week, the U.S. central bank kept interest rates unchanged but hinted that an increase could come in December if the job market continued to improve.
2. ECB President Draghi Delivers Comments
ECB President Mario Draghi is due to testify before the European Parliament's Committee on Economic and Monetary Affairs in Brussels on Monday at 15:05GMT (11:05AM ET).
On Wednesday, Draghi is scheduled to speak about current developments in the euro area at the German Bundestag, in Berlin at 14:30GMT (10:30AM ET).
Investors will be looking for indications that the ECB is moving towards boosting monetary stimulus at its December meeting.
3. BOJ Governor Kuroda Remarks in Focus
BOJ Governor Haruhiko Kuroda is due to speak at the National Securities Industry Convention in Tokyo on Thursday at 6:35GMT (2:35AM ET).
His comments take on extra importance after the Japanese central bank announced that it will shift policy to targeting interest rates on Japanese government bonds as the focus of its massive stimulus program, abandoning its target of increasing base money.
4. OPEC Meeting
OPEC members, led by Saudi Arabia and other big Middle East crude exporters, such as Iran and Iraq, will meet non-OPEC producer Russia at informal talks on the sidelines of an energy conference in Algeria from Monday through Wednesday.
According to market experts, chances that the meeting would yield any action to reduce the global glut appeared minimal. Instead, most believe that oil producers will continue to monitor the market and possibly postpone freeze talks to the official OPEC meeting in Vienna on November 30.
An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran's refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus.
5. U.S. Presidential Debate
With just over six weeks until Election Day in the U.S., the market will turn its attention to the first televised U.S. presidential debate Monday night.
Market participants are mostly expecting Democratic candidate Hillary Clinton to win the presidency and have not factored in the implications of a victory for Donald Trump. The idea of Trump in the White House is a worrying one for some investors who balk at his populist, unpredictable style.
Recent polls have shown a tightening race, with Clinton's once-comfortable lead narrowing sharply. The latest NBC/ Wall Street Journal poll gives Clinton a 6 point lead, 43% to Trump's 37%, among likely voters.
Democratic nominee Hillary Clinton appears to have edged out her Republican opponent Donald Trump in the first presidential debate, based on analysts' take on the market reaction.
Online betting companies shortened the odds on a Clinton win in the wake of the Monday night debate, leaving her as the clear favorite among bettors.
Traders are mostly expecting Democratic candidate Hillary Clinton to win the presidency and have not factored in the implications of a victory for Donald Trump. The idea of Trump in the White House is a worrying one for some investors who balk at his populist, unpredictable style.
Recent polls have shown a tightening race with just around six weeks to go until the November 8 election. The next presidential debate is scheduled for October 9, with the third and final clash set for October 19.
2. Mexican peso jumps 2% after U.S. debate
The Mexican peso, seemed as a market barometer of the U.S. presidential election due to its close trade ties with the U.S., jumped more than 2% against the greenback to 19.436 at one point, before giving back some gains to trade at 19.607 during morning hours in New York, up 1.35% on the day.
The peso has hit record lows in recent sessions on concerns that a Trump victory would threaten Mexico's exports to the U.S., its single biggest market.
3. Oil sinks after Saudi Arabia casts doubt of output deal
Oil prices were under pressure early Tuesday after Saudi Arabia appeared to play down expectations for any supply policy decision during Wednesday's meeting.
Saudi Arabia's Energy Minister Khalid al-Falih said on Tuesday that talks among OPEC and non-OPEC oil producers in Algiers this week are consultative, casting doubt on the chances of any policy decision during the meeting. His comments follow similar remarks from Iran's oil minister on Monday.
U.S. crude was down 73 cents, or 1.6%, to $45.20 a barrel, while Brent sank 85 cents, or 1.75%, to $47.09 a barrel.
4. Deutsche Bank shares plunge to another record low
In Frankfurt, shares of Deutsche Bank (DE:DBKGn) dropped 3.1% to touch an all-time low of €10.20 for the second day in a row. That drop came after Deutsche shares sank 7.5% on Monday amid media reports that German Chancellor Angela Merkel would not support providing state aid for the country’s largest lender.
Merkel also declined to intervene in Deutsche's legal battle with the U.S. Justice Department, which earlier this month announced it may seek up to $14 billion from the bank to resolve investigations into crisis-era mortgage securities.
Shares of the German banking giant are down nearly 60% so far this year amid concerns over the lenders weakening financial health.
5. Global stocks turn lower as U.S. debate cheer fades
U.S. stock index futures pointed to modest gains at the open on Tuesday morning, with the Dow futures well off the session high as a U.S.-presidential-debate-induced rally ebbed.
Meanwhile, European and U.K. stocks turned lower in mid-morning trade, with Germany's DAX down 1%, as weak sentiment towards the region's banking sector weighed.
Earlier, Asian shares rallied, as investors took heart from an apparent win for Hillary Clinton over Donald Trump in the first U.S. presidential debate.
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Oil prices retreated on Thursday, after surging by as much as 6% a day earlier, as the initial euphoria over a preliminary agreement on oil output faded amid doubts over how OPEC would implement such a plan.
Brent shed 37 cents, or 0.75%, to $48.87 a barrel during morning hours in New York, while U.S. crude was down 24 cents, or 0.5%, to $46.84 a barrel.
Crude soared on Wednesday after OPEC members surprised the market by agreeing to cut oil output in the first such deal since 2008 in talks held on the sidelines of an energy conference in Algeria. The 14-member bloc, however, deferred the task of finalizing a plan to make those cuts until November.
2. Global stocks rally on OPEC deal
Asian shares ended mostly higher, as investors cheered a decision by the Organization of the Petroleum Exporting Countries to reduce oil production. In Tokyo, the Nikkei 225 closed up 1.4%, boosted by a weaker yen.
Meanwhile, European and U.K. stocks were broadly higher in mid-morning trade, boosted by the surprise decision by the Organization of the Petroleum Exporting to work toward cutting oil production.
However, U.S. stock index futures pointed to a flat open on Thursday morning, as the market grew more skeptical of the OPEC deal amid a lack of concrete details.
3. More U.S. data, Fedspeak ahead
Market players looked ahead to more U.S. economic data for clues on the likelihood of a December rate hike.
Data due on Thursday includes weekly jobless claims, the final look at second-quarter GDP and the trade deficit, all at 8:30AM ET (12:30GMT). Pending home sales are reported at 10:00AM ET (14:00GMT).
A handful of Fed policymakers are also due to make public appearances on Thursday that may offer insight into how divided they are about raising rates.
Atlanta Fed President Dennis Lockhart, Fed Governor Jerome Powell, Minneapolis Fed President Neel Kashkari and Kansas City Fed President Esther George are all scheduled to speak during the day.
There is also an appearance by Fed Chair Janet Yellen, who is due to speak via videoconference at the Minority Bankers Forum in Kansas City at 4:00PM ET (20:00GMT).
4. Dollar extends rebound against the yen
The dollar climbed 0.75% to 101.43 against the yen, extending its rebound from one-month low of 100.06 touched last week, as investors moved into riskier assets following an OPEC deal to cut oil output.
The U.S. dollar index, which measures the greenback's value against a basket of six major currencies, was up 0.2% at 95.50 early Thursday, helped by fresh hopes of a U.S. rate hike before the end of the year.
Markets are currently pricing in around a 57% chance of a rate hike at December's meeting, according to Investing.com's Fed Rate Monitor Tool.
5. Commerzbank to cut almost 10,000 jobs, suspend dividend
Commerzbank AG (DE:CBKG) on Thursday said it plans a wide-ranging overhaul that includes laying off 9,600 jobs, or roughly 20% of its workforce, and scrapping its dividend for this year, as the German lender attempts to shore up profitability.
The bank will take costs of about €1.1 billion to restructure businesses and it will book a €700 million loss in the third quarter, it said in a statement on Thursday. It added that it would therefore scrap dividend payments for "the time being."
Shares of Germany's second biggest bank turned south in volatile trade in Frankfurt after spending most of the morning session in the green.
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Japan slips further into deflation, China’s factory sector struggles.
Global stocks lower as Deutsche Bank undermines risk appetite.
Oil slumps more than 1% after two-day rally.
U.S. personal spending and inflation data in focus.
The Week Ahead: 5 Things to Watch on the Economic Calendar
1. U.S. jobs report for September
The U.S. Labor Department will release its September nonfarm payrolls report at 8:30AM ET (12:30GMT) on Friday.
The consensus forecast is that the data will show jobs growth of 170,000, following an increase of 151,000 in August, the unemployment rate is forecast to hold steady at 4.9%, while average hourly earnings are expected to rise 0.3% after gaining 0.1% a month earlier.
An upbeat employment report will point to an improving economy and support the case for higher interest rates in the coming months, while a weak report would add to uncertainty over the economic outlook and push prospects of tighter monetary policy further off the table.
2. U.S. ISM PMI surveys
The U.S. Institute of Supply Management is to release data on September manufacturing activity at 10:00AM ET (14:00GMT) on Monday. The gauge is expected to rise to 50.3, after falling to a seven-month low of 49.4 a month earlier.
On Wednesday, the ISM will report on September service sector activity, amid expectations for a reading of 53.0. In August, the gauge dropped to 51.4, its weakest level since February 2010.
Anything above 50.0 signals expansion, below indicates contraction.
3. Fed speakers
A handful of Fed policymakers are due to make public appearances that may offer insight into how divided they are about raising rates in the coming months.
On Tuesday, Richmond Fed President Jeffrey Lacker is due to speak on the economic outlook at 8:05AM ET (12:05GMT), while Chicago Fed President Charles Evans will speak on monetary policy and the economy at 7:40PM ET (23:40GMT).
On Wednesday, Minneapolis Fed President Neel Kashkari and Richmond Fed President Jeffrey Lacker are on tap.
Finally, Fed Vice Chair Stanley Fischer, Cleveland Fed President Loretta Mester, Fed Governor Lael Brainard and Kansas City Fed President Esther George are all scheduled to speak on Friday.
Markets are currently pricing in around a 10% chance of a rate hike in November, according to Investing.com's Fed Rate Monitor Tool. For December's meeting, odds were at nearly 62%.
4. U.K. September PMI's
The U.K. will release readings on September manufacturing sector activity on Monday, followed by a report on the construction sector on Tuesday and the service sector on Wednesday.
The manufacturing PMI is forecast to inch down to 51.1 from 53.3 a month earlier, construction activity is expected to decline slightly to 49.0 from 49.2, while a survey on Britain's giant services sector is forecast to dip to 52.0 from 52.9 last month.
The Bank of England kept monetary policy on hold last month, but indicated that it could cut interest rates again as soon as November unless the economy picks up.
5. Reserve Bank of Australia Rate Decision
The RBA's latest interest rate decision is due on Tuesday at 3:30GMT (12:30AM ET). Most economists expect no policy change, after the central bank surprised markets in August with a 25 basis point rate cut to a historic low of 1.50% in an effort to boost sluggish inflation and spur economic activity.
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All eyes will be on the U.S. employment report for September as markets look for clues on the state of the labor market and its impact on the Federal Reserve’s (Fed) future return to policy normalization.
The U.S. Labor Department will release its September nonfarm payrolls (NFPs) report at 8:30AM ET (12:30GMT) on Friday.
The consensus forecast is that the data will show jobs growth of 170,000, following an increase of 151,000 in August, the unemployment rate is forecast to hold steady at 4.9%, while average hourly earnings are expected to rise 0.2% after gaining 0.1% a month earlier.
2. Markets set to adjust Fed rate hike bets
An upbeat employment report will point to an improving economy and support the case for higher interest rates in the coming months, while a weak report would add to uncertainty over the economic outlook and push prospects of tighter monetary policy further off the table.
With most Fed officials already having indicated that the economy is “very close” to full employment, attention may look past job creation and focus more on the state of wages, especially for a Fed that is waiting for inflation to return towards its 2% target.
Most analysts dismiss the possibility of a November rate hike, citing the proximity of the U.S. presidential election. Markets currently price in the chance of an increase next month at just 14.5%, according to Investing.com’s Fed Rate Monitor Tool.
Most bets pointed to a December move with the odds at 63.4%.
3. Flash crash in sterling of more than 6%
The pound suffered a dramatic fall of more than 6% in Asian trading on Friday.
Analysts did not rule out the possibility of a “fat finger”, or human error, but most speculated that it could have caused by algorithms picking up on comments from French President François Hollande with the move exacerbated by thin trade.
Hollande took a rough position on the Brexit, as the move for the U.K. to leave the European Union (EU) is known, and suggested that the British government was prepared to move forward even if it was a “hard Brexit”.
“There must be a threat, there must be a risk, there must be a price,” Hollande said referring to the decision to exit the EU.
“Otherwise we will be in a negotiation that cannot end well,” he added.
After the initial crash, cable recovered positions but continued to show severe weakness. At 4:58AM ET (8:58GMT), GBP/USD was down 1.51% at 1.2427.
4. Global stocks mostly lower after sterling flash crash and ahead of U.S. jobs report
Asian shares fell on Friday with a plunge in sterling in the Asian day causing concern ahead of U.S. jobs data seen as a crucial part of the picture for chances of a rate hike by the Fed in December.
European stocks were mostly lower on Friday as the pound’s large move spooked investors and markets remained concern about the impact of the U.K. leaving the EU.
U.S. futures also followed global equities lower with investor’s cautious ahead of the employment data.
5. Oil holds above $50 on hopes for OPEC deal
Crude futures continued the bullish trend Friday on the back of optimism over an eventual deal among major producers to curb or cut production and the surprise drop in U.S. crude inventories seen this week.
Black gold continued to move higher on the back of comments from Algerian energy minister Nouredine Boutarfa who said that OPEC could cut output beyond the amount considered at the end of September if it was needed.
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Mexican peso jumps 2% after U.S. debate, Trump video fallout.
Oil declines as markets await OPEC headlines from Istanbul.
Global stocks mixed with U.S. debate, oil, pound in focus.
Deutsche Bank shares slide after no deal reached with DoJ.
Dollar hits 11-week high on bets of December Fed rate hike
The dollar hit an 11-week high on Tuesday as investors upped their bets on the Federal Reserve raising U.S. interest rates before the end of the year, and as doubts grew over Donald Trump's ability to win the U.S. presidency.
In Sweden by contrast, market players are betting the central bank may have to ease policy further - a view that was strengthened by a weak inflation print on Tuesday, sending the Swedish crown to a 6-1/2-year low against the euro (EURSEK=D4).
As U.S. Treasury yields rallied to their highest levels since early June , the dollar index - which measures the greenback against six major peers - jumped 0.6 percent to 97.475 (DXY), its highest since late July.
Traders have priced in a 70 percent chance the Fed will hike rates at its Dec. 13-14 meeting, up from 66 percent on Friday, according to CME Group's FedWatch tool.
Some analysts said widening odds of Trump becoming president were also helping to drive up the dollar, after the most senior Republican in Congress, Paul Ryan, distanced himself from him. A Trump victory is seen as likely to trigger political uncertainty, which markets tend to shy away from.
"Trump is widely deemed to be dollar-negative, while a Clinton victory is regarded to be positive for the dollar. In the absence of a shock victory for Trump, the Federal Reserve will most likely raise interest rates in December, thanks to improving data in the US," said Forex.com analyst Fawad Razaqzada.
But not all were so sure about Trump's impact on the dollar. "I think politics is difficult for the dollar these days – I don't know if the market has quite made up its mind about what to make of a possible Trump victory," said DZ Bank currency strategist Sonja Marten, from Frankfurt.
"I think (the dollar strength) is more to do with the Fed... At this point it seems like they're more willing to take a slightly more hawkish stance."
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Preview: Fed Dudley Speaks, Fed George Speaks , Sep FOMC Minutes
New York Fed President Dudley (FOMC voter) speaks: Dudley speaks on the economy. Based on his recent speeches, we think he is now of the view that, from a risk-management perspective, accommodation should be removed cautiously given the lack of scope to lower rates in the event of an economic downturn.
Kansas City Fed President George (FOMC voter) speaks: George speaks on the economic outlook. She has dissented several times this year. We expect her to maintain her call for a rate hike.
FOMC minutes: Given the three dissents in favor of a rate hike at the FOMC’s September meeting, we expect the minutes to reveal widening divisions within the committee over the appropriate stance of policy. On one side are those who believe a rate hike in September would have been warranted given that the economy is operating near mandate-consistent levels and mediumterm risks are rising. These concerns were expressed by regional Fed presidents Rosengren, Mester, and George in remarks leading up to, and following, the meeting. On the other side are those FOMC members, primarily within the Board, who point to a slower removal of labor market slack, via trends in participation and other variables, and a lack of evidence that inflation or financial instability are rising, as supporting a further delay in policy normalization.
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Germany Sept CPI final mm +0.1% vs +0.1% exp
German September CPI final readings 13 Oct 2016