Trading with point and figure

oil/wti

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** EVENTS PREVIEW **
********************

A slightly busier day lies ahead on the data front, dominated by surveys in the form of 'flash' PMIs, the UK CBI Industrial Trends and Eurozone Consumer Confidence, with US New Home Sales and Brazil's Current Account providing the accompaniment. On the policy side of the equation, the generally thoughtful Mr Coeure takes part in a panel on EMU, which may or may not often his current thoughts on the policy outlook. Meanwhile Turkey's TCMB is seen tightening its 'rate corridor' once again with a 25 bps cut to its overnight Lending Rate, but keeping the lower bound unchanged due to sticky and above despite huge political pressure for a more meaningful cut; Hungary's MNB is seen keeping rates steady at 0.90%. The US Treasury kicks off its end of month refinancing operation with $26.0 Bln of 2-yr, for which a reasonable concession has been fashioned thanks to less accommodative chatter from recent Fed speakers, though as the attached chart highlights, 2-yr yields are nearer the bottom of the year's range. Yesterday's price action in bonds, above all US Treasuries, underlines that less accommodative Fed talk is not really a match for the overwhelming pressure to hunt down any form of yield, and the accompanying weight of money chasing any return come hell or waters high, while the setback in oil was a reminder that the recent rally was all about short-covering, which may well have run its course without something far more persuasive in terms of a production freeze, let alone cut, given that supply continues to appear more than plentiful.

** Eurozone, UK & US - August PMIs/CBI Industrial Trends **
- The Japan PMI was slightly better, above all the return to positive territory for the Production sub-index, however the underlying profile for the sector remains clearly very sluggish. Meanwhile, as is often the case, forecasts for today's Eurozone flash PMIs look to be rather agnostic, in so far as the consensus little material change vs. July's final readings, with anecdotal evidence offering few reasons to expect any sharp changes, though the Ifo survey (for July) did imply a modest improvement. The doom and gloomsters continue to have the upper hand as far as UK forecasts go, with the Orders index in the CBI's Industrial Trends survey seen falling to a 4-month low of -10 after -4 in July and a 15-month high of -2 in June; there will be particular focus on total orders compares to export orders, as well as Selling Prices, which hit a 16 month high of +5 in July. As for the US Markit Manufacturing ISM, this is rather more "in sync" with its ISM equivalent than the "down at heel" Services measure, and is forecast to edge fractionally lower to 52.7 from a nine month high of 52.9 in July.


from Marc Ostwald
 
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