- Typically thin schedule for second trading day of the month, focus on
UK Construction PMI and BoE FPC minutes ahead of US Auto Sales and
Fed's Powell speech; China and Germany holidays; API oil inventories
- UK Construction PMI: seen holding at 12-mth low, focus on residential
construction, and anecdotal evidence on input costs and skills shortages
- US Auto Sales: Hurricane Harvey replacement wave expected to revive
sales to best level since February, some upside risks, but unlikely
to be enduring trend, but should help dent stock overhang
- Charts: WTI oil future & UK Services vs Construction PMI
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** EVENTS PREVIEW **
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The Chinese and German holidays will likely thin trading activity today, as will a rather modest calendar of data and events. Statistically the highlights are limited to the UK Construction PMI and US Auto Sales, with Turkish CPI again expected to remind us why the TCMB continues to resist enormous political pressure to cut rates, as a renewed bout of TRY weakness and rising commodity prices, above all energy, pressure CPI higher in both headline and core terms. In policy terms, once the as expected RBA no change decision and resolutely neutral policy outlook have been digested, there are the latest BoE FPC minutes and a speech by Fed's Powell on regulatory reform to watch out for, the latter primarily of significance give that Powell is a candidate for the position of Fed chair. The UK Construction PMI has of late diverged quite sharply with the normally quite correlated Services PMI, as the ailing construction sector continues to show little growth momentum, above all due to commercial construction as well as capacity constraints, input prices and skill shortages, and is expected to hold at August's 12-month low of 51.1. The August report suggested residential construction was seeing something of a revival, and it will be interesting to note whether this trend has continued. It is Tuesday, so it all API oil inventories day, with Crude stocks seen dropping 500K after a 1.5 Mln drop in the prior week, while Distillate stocks are seen down 1.9 mln (in that respect, note this article via Reuters' John Kemp "Hedge funds amass record bullish position in distillates"
https://www.reuters.com/article/oil...sh-position-in-distillates-kemp-idUSL8N1MD2UH), with Gasoline seen rising a further 1.0 Mln (vs prior 1.1 Mln).
** U.S.A. - Sept Auto Sales **
- August's 2017 low of 16.0 Mln SAAR was in no small part induced by the impact of Hurricane Harvey, and the expected jump to a 17.0 Mln pace (best since February's 17.32 Mln) is predicated on related replacement demand, even if the impact of hurricane Irma may act as a restraint. Be that as it may this would, if correct, also mark the first time this year that sales post a positive reading in y/y terms. The anecdotal evidence from JD Power/LMC Automotive and Kelly Blue Book both centre around a 1.4 Mln monthly pace of sales, while Edmonds sees 1.435 Mln (ca 17.5 Mln SAAR), though Kelly Blue Book suggested that sales would still be likely lower in y/y terms. A close eye as ever needs to be kept on levels of financing incentives and other discounts.
from Marc Ostwald
