Trading with point and figure

** EVENTS PREVIEW **
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A relatively subdued start to the week in statistical terms, but a busy one on the policy front with Fed speakers (Lockhart, Kashkari and above all Brainard) offering their final thoughts before the pre-FOMC meeting 'purdah' period starting tomorrow. In data terms, there are the overnight Japan Orders (much stronger than expected for a second consecutive month, and prompting an upgrade of the government's sector outlook) and PPI data to digest ahead of Indian CPI and Industrial Production. After last week's mini-rout in G7 government bonds, a suitable concession has been fashioned for this week's 3, 10 & 30-yr Treasury auctions, which unusually see a double whammy of 3 and 10-yr sales today (in order to ensure settlement ahead of August 15). A sour tone in Asian equity markets overnight and a further steepening of the JGB yield curve, thinner trading conditions this week due to the Eid-Al-Adha (Hajj) and from mid-week the North East Asia Mid-Autumn holidays, questions over Mrs Clinton's health only adding to US election related uncertainty, Friday's quarterly futures and options expiries, and Oil options expiry serve as the overarching themes. in respect of oil, it is worth noting that in contrast to the previous week, while the latest CFTC data for WTI saw net longs cut 42.9K contracts, this was led by fresh shorts (+39K) rather than net longs being cut (-3K).

In respect of the Fed, Brainard's speech will likely force a fairly sharp shift in Sept rate hike probabilities. Eminently the fact that the speech was seemingly hastily arranged prompts the assumption that she will lean atypically to the hawkish side of the equation, in so far as a dovish verbal intervention would have seemed superfluous, given markets were ascribing little or no chance of a September move. The case for a September move is not purely related to the economy, jobs and inflation, which are tootling along at a respectable pace, and therefore beg the question why emergency levels of rate and unconventional accommodation are needed, in so far as maintaining them sends a very negative signal on the economy. It is also about at least partly wresting control of market expectations on the policy outlook, escaping the shackles of a clear oversensitivity to any and every potential risk (be that domestic or international; economic, political or market related), which have painted the FOMC into a corner, which it de facto needs to escape. The main counter to the likes of Tarullo and those who bemoan the level and trend in inflation currently is that the argument that one 25 bps rate hike, in the context of an extremely low trajectory for rates, cannot be credibly argued as likely to derail the economy, or raise the risk of disinflationary forces re-emerging.


Week Ahead recap:

- Big week for data in the US (Retail Sales, Industrial Production, PPI, CPI and the NY & Philly Fed Manufacturing surveys, China (Retail Sales, Industrial Production, Fixed Asset Investment) and UK (CPI, RPI, PPI, Unemployment, Retail Sales, ONS House Prices); the German ZEW survey is also due

- Big week for holidays - Eid-al-Adha (Feast of the Sacrifice, Hajj) all week in many Middle East, Islamic countries and in East Asia with the Mid-Autumn Festival Wednesday through Friday in China, Hong Kong, Macau, South Korea Taiwan. The sharp moves in govt bonds and equity markets on Friday may have been in part due to 'tidying up' ahead of these holidays (perhaps involving some Mid East SWFs)

- Central Banks: Bank of England set to hold rates and QE volume, but emphasize negative outlook and scope for more easing. SNB quarterly monetary policy review to keep policy settings unchanged, emphasize can intervene anytime to quell any CHF strength, but will also be interesting to see if any forecast changes, with CPI ticking up to -0.1% y/y and Q2 GDP way above forecasts aT 0.6% q/q 2.0% y/y. Russia's Bank Rossi set to cut rates 50 bps for first time since April to 10.0%, justified by CPI gradually falling and leaning against any further RUB strengthening.

- Govt Bond supply: quite plentiful: US sells 3, 10 & 30-yr, in Eurozone Netherlands, Germany, Italy, France and Spain all set to sell debt, with a total volume of ca. EUR 22.0 to 23.0 Bln, UK sells 30-yr Index-Linked Gilts and japan offers 20-yr JGBs. In theory, there should be a reasonable volume of corporate issuance too, but that will be contingent on govt bonds finding some stability.

- Oil market still looking at rumours, snippets on the chatter about a production freeze, EIA Crude Inventories in focus with some suspicions that the sharp fall in latest week was due to sharp drop in Oil Imports due to port problems, which may well be reversed. IEA and OPEC monthly oil market reports also due

- EU summit at end of week to discuss Brexit and future of EU; Sunday will also see state elections in Berlin.

- Another very thin week for Corporate Earnings


from Marc Ostwald
 
007 I'm amazed how you can fit in scalping points in-between all your forum updates tbh!
 
He is a dentist - they are like an octopus - arms and legs multi tasking!
its quite easy
we have our areas where we think something might happen...as you can see this morning..ftse had 6664-6672 and 6700 on the cards
so..all you do is filter the signals
 
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