Trading with point and figure

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** EVENTS PREVIEW **
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Having digested yesterday's rather anodyne Fed statement, attention turns to the Eurozone in terms of statistics with German Unemployment and provisional CPI for July accompanied by the monthly EC Confidence surveys for the Eurozone, while the US has weekly jobless claims, advance Goods Trade Balance and the KC Fed Manufacturing survey to accompany a further torrent of corporate earnings. Italy (5 & 10-yr) and the US (7-yr) feature in terms of govt debt sales, while ECB's Coeure speaks at the Yale Forum on 'financial crisis management'. Eminently this is all likely to be secondary to the BoJ meeting tonight. There appears to have been some attempt to wind back market expectations of some BoJ policy action, with 'helicopter money' ruled out by Kuroda at that June BBC interview and again at the weekend, but then again he ruled out negative rates a week before the January cut 'disaster', and the ensuing opprobrium. But there are definitely some market participants expecting some more QQE at the very least, and perhaps even more so given that the emerging details on the much trumpeted JPY 28.0 Trln fiscal package suggest that the concrete additional spending measures will amount to no more than JPY 7.0 Trln, which will likely be viewed as rather insubstantial.

** Germany - July Unemployment / CPI **
- Today's labour data are expected to see a marginal slip in Unemployment, which implies yet another record for post-reunification Employment, which also fits well with yesterday's strong GfK Consumer Confidence, which is closely correlated with labour market trends (both jobs and wages). July's provisional CPI and HICP are expected to be around trend for July (as summer sales discounts are unwound) with m/m rises of 0.2% and 0.3% respectively, and a marginally higher, but still very low HICP y/y print of 0.3%. This will be the last month in which a positive m/m increase falls out of the comparison with 2015, per se energy prices above all will have to fall at the same pace as in 2015 to stymie a gentle but persistent upward drift in the y/y measure.

** U.S.A. - Initial Claims, Advance Goods Trade Balance **
- While yesterday's FOMC statement was overall cautious on the economy, there was a clear acknowledgement that labour demand is robust. Today's Initial Claims are once again forecast to rise from a run of 253K/254K readings over the past three weeks to 261K, and while that would remain extremely low by any historical standard, the implicit scepticism among forecasters about the strength of the labour market is notable. The Advance Goods Trade Balance for June will be the last major statistical item feeding into tomorrow's advance Q2 GDP reading. Forecasters look for little change relative to May at $-61.0 Bln, perhaps predicated on the fact that the June 2015 deficit was the largest of the year. But given the widening seen in May, the risks would appear to be for a modest narrowing in the deficit, though the key aspect in terms of tomorrow's GDP will be the net change in exports and imports (in real terms). Both of today's reports will certainly need to spring a large surprise to have a material impact on markets that are focussed on tonight's BoJ meeting and month end portfolio adjustments.
from Marc Ostwald
 
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