Market movers today
We have a slow start to a very important week today. Today we get euro area monetary aggregates and loan data and Swedish trade balance is also released. After years of negative prints, the trend is once again positive, surely helped by the weak SEK. Our forecast is for a SEK5bn surplus, but this should not be a market mover.
Focus this week will be on the Brexit deadline on Thursday (although we expect another extension) and FOMC meeting on Wednesday (where we expect a cut). We also have Bank of Japan policy meeting where markets price around some 50% probability of a rate cut.
On Friday, we expect a weak US job report, with an increase of just 50,000. Preliminary Q3 GDP data for both the euro area and the US are due out.
In China, both Caixin and official PMI manufacturing for October, which diverged in September, are due for release.
Selected market news
Asian stock markets opened the Fed week climbing to three-month highs on extended risk on sentiment. The SP 500 Index saw its all-time high last Friday, while Europe traded in green as well. Ten-year US Treasury yields climbed to a five-week high. Markets are likely to enter a standby mode ahead of the Fed’s rate decision on Wednesday amid ongoing developments in the China-US trade negotiations and the corporate earnings season. According to Reuters, more than 80% of American companies have exceeded Wall Street expectations so far this earnings season despite concerns about the trade war.
China announced that the text of the first phase of a trade agreement with the US is ‘basically completed’ and agricultural standards have been successfully discussed. Last Friday, the American counterpart also released positive comments on the pact, which is aimed to be signed by Presidents Donald Trump and Xi Jinping in Chile in November.
The EU is proposing to extend the Brexit deadline to 31 January. Bloomberg reported it saw a draft ahead of today’s meeting in Brussels. According to the plan, the UK could leave the EU earlier if both sides ratify the divorce deal in time. The recommendation comes as British Premier Boris Johnson looks set to lose his bid for a snap poll on 12 December that parliament will consider today.
Argentine markets will be in focus today with probably excessive volatility after opposition candidate Alberto Fernandez won in Sunday’s presidential election, while business-friendly candidate Mauricio Macri surrendered. Argentina’s central bank tightened further capital controls ahead of the vote, cutting the maximum amount of USD Argentines can buy. Last Friday Argentine’s bonds were already in free fall.
