- Digesting easing of Catalan/Madrid tension and better than forecast
Japan Orders, awaiting US JOLTS Job Openings and Sept FOMC minutes,
Hammond testimony, China pre-Oct 18 Party Congress communique, and
OPEC & EIA monthly reports; new Dutch 7-yr, German 5-yr and US
3 and 10-yr auctions
- Spain: easing of tensions puts Catalonia on the back burner near-term,
Budget resolution and passage still a major challenge
- FOMC minutes: focus on majority view on bar (or lack thereof) to Dec
rate hike, above all relative importance of inflation vs. tight labour
market and loose financial conditions
- Charts: Iron Ore, Steel Rebar, WTI and JPM EMBI spread
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** EVENTS PREVIEW **
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Today's data schedule is best described as sparse, with the better than expected overnight Japan Machinery Orders to digest, while the afternoon brings US JOLTS Job Openings. The political and policymaker schedule is rather busier, with initial focus on china President Xi communique after the meeting of the Central Committee of China Communist Party likely to be scoured for clues on what may come in the way of policy changes from the major 5 year Congress on October 18th. UK Chancellor Hammond's testimony to the House of Commons Treasury Select Committee will attract plenty of attention both in respect of Brexit negotiations and what may be in the November Budget. Elsewhere there are the September FOMC minutes, and oil markets will look to the double whammy of the OPEC and EIA monthly oil market reports, along with the API inventories report tonight, where a 1.8 Mln bbls drawdown (for 3rd consecutive week) is anticipated, with Distillates seen down 2.4 Mln, and Gasoline stocks down 1.0 Mln. A busy day for govt bond auctions has the launch of a new Dutch 7-yr DSL, EUR 3.0 Bln of German 5-yr and a double auction of 3yr and 10yr US Treasuries. The Catalan decision to step back from outright confrontation with the Madrid government does not resolve the stand-off, but at least reduces immediate risks, though it does not make passage of the 2018 budget any easier, given PP's dependence on the Basque separatist party's votes.
** U.S.A. - September FOMC minutes **
- While there is generally somewhat less interest in the minutes of press conference / quarterly forecast FOMC minutes, markets will be looking for clues as to where the bar on raising rates in December lies. The key issue will likely be whether Yellen's consignment of the dip in inflation since March to the 'mystery' bin is a broadly held view, as the unchanged 'dot plot' appeared to suggest, or whether views were rather fluid and 'wait and see'. Indeed the question for the FOMC is rather that very loose financial conditions, despite 3 rate hikes since December, and an ostensibly very tight labour market weigh more heavily as considerations on rates. Equally there will be interest in what the committee would consider to be a material rationale for altering the auto pilot course for its balance sheet reduction.
from Marc Ostwald