- Modest data schedule has UK PSNB & CBI Industrial Trends, US Exsiting Home
Sales; focus on central bank speakers - Yellen & Coeure top schedule;
rumoured Japan forecast cuts also in view, along with German politics
- If Japan were to cut long-term CPI forecast, the road to BoJ QQE taper
would be considerably shorter
- Charts: WTI, Iron Ore, Corn, Wheat & Milk futures, LME Nickel, US HY bond
OAS spread, US 2 & 10yr Yield, German vs US 10 yr spread, JPM EMBI spread
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** EVENTS PREVIEW **
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Today's run of scheduled data and events is again unlikely to have anything more than a passing impact on markets. Statistically there are the monthly UK PSNB data, which is effectively totally overshadowed by tomorrow's Budget, though year to date figures on tax and VAT receipt growth will require some scrutiny, and US Existing Home Sales. On the policy side of the equation, there are the RBA minutes and a speech by RBA governor Lowe to digest, ahead of Yellen's 'tete a tete' with former BoE Governor Mervyn King, and a speech by ECB's Coeure, as well as a rate decision in Hungary. Hungary's MNB is expected to introduce some further measures aimed at lowering long-term rates via unconventional measures (though not QE), while also emphasizing its antipathy to HUF appreciation (above all vs EUR). As for political developments in Germany, President Steinmeier's very clear indication that he will not sanction fresh elections until far greater efforts to exhaust all coalition options have been made, came as no surprise. The fact that he emphasized that no party could simply walk away from the September 24 election result was clearly aimed as much at the FDP's flouncing out of the 'Jamaica coalition' negotiations, as at his own (SPD) party's refusal to enter any form of negotiations. In both cases, it is clear that the perceived damage to their electoral fortunes from participating in the previous three CDU/CSU led coalitions, has left them bordering on a state of paranoia about any new coalition. The truth is that leaves them stuck between a rock and a hard place, on the one hand they may well suffer further electoral erosion if they do participate, on the other, that may also be the price that they pay if their refusal to negotiate forces fresh elections, which would likely not happen before February/March. Just in and well worth noting is news that the Japanese govt is likely to cut its GDP and CPI estimates in its mid-term report, with the long-term CPI forecast likely to be cut to 1.5% y/y from 2.0%, which in turn implies less road for the BoJ to travel before it starts to ease back (taper) on its QQE programme. Also on the political front, a close eye still needs to be kept on developments in the Lebanon, but perhaps of more immediate significance is the declaration by the Iranian Republican Guards Qods force commander that that ISIS has been 'ended' in Syria, and the 'secret' meeting overnight between Putin and Assad, with Putin being said to be set to discuss Syrian developments with Trump later today.
** U.S.A. - Oct Existing Home Sales **
- The consensus looks for a marginal 0.2% m/m pick-up in Existing Home Sales to a 5.40 Mln SAAR pace, which would be close to the year's low of 5.35 Mln, with low levels of inventories of homes for sale continuing to provide the main headwind, rather than any de facto drop in demand.
from Marc Ostwald