Market movers today
The most relevant data release today is the US consumer confidence indicator from the Conference Board. After some improvements over the summer consumer confidence fell in August and consensus is looking for a further small decline in the September print.
In Hungary, the central bank will announce its monetary policy decision. All analysts in Bloomberg consensus (we included) expect the interest rate to remain unchanged at 13.0%.
In Sweden, we receive PPI figures for August.
The 60 second overview
US: Credit rating agency Moody’s yesterday expressed concern over a potential government shutdown in US, which it argues would reveal institutional and governance weakness not seen in other Aaa-rated countries.
Fed: Minneapolis Fed President Neel Kashkari overnight said that he expected the Fed to raise interest rates one more time this year and keep policy tighter for longer if the economy proves stronger than expected.
Energy: Natural gas prices have risen to the highest level since April over the past week. The price increase comes despite still mild autumn weather, increased energy production from wind turbines and end to the strike among Australian LNG workers. Instead it might owe to unstable natural gas flows from Norway due to maintenance and higher global demand for LNG.
Equities were mixed on Monday. Europe and Nordics continued to bleed but US managed to close a tad higher for the day. S&P 500 up 0.4% (after losing -3% last week), Stoxx 600 -0.6% (-1% last week) and Nordics -0.3%. No doubt yields play a crucial role in the current risk-off regime. Thereby, Monday started with huge differences between sectors and styles. Bond proxy Orsted and Fortum were worst off, falling -4-5%. It is also worth noting that mainly defensives sold off while cyclical retail (Pandora and H&M flat), pulp (Stora Enso +1%) and industrials (Atlas +1%, Sandvik and Volvo 0%) held up. Bash in line with our strategy though, where we highlight retail, pulp, banks and short cyclical industrials, financed by growth/quality defensives. Overall, our value overweight has performed very well lately which of course speaks for some mean reversion at a later stage. US futures are a notch lower this morning again.
FI: Last week’s higher for longer narrative extended yesterday with rates rising across the board for the 3y+ maturities. The higher rates came from the long end with 30y Germany ending almost 11bp higher on the day. The 10y and 30y Bund yields reached highest levels since 2011. There was no clear trigger for the significant sell-off led by the long end.
FX: EUR/USD broke below 1.06 for the first time since mid-March. Meanwhile, USD/JPY is closing in on the highs of October last year as US yields continue to climb. The SEK defied the shaky risk sentiment and traded strong on the back of the Riksbank starting their hedging program, with EUR/SEK briefly below 11.70 on the day. EUR/GBP traded above 0.87 for the first time since March as markets continue to digest the BoE disappointment last week.
Credit: Credit spreads widened modestly yesterday, with iTraxx Xover closing in 421.6bp (+4.9bp) and Main in 78bp (+0.8bp). However, despite the slightly downbeat sentiment, several primary market transactions were printed and reception was solid, with oversubscription around 2.0x for most transactions.
Nordic macro
In Sweden we get the PPI numbers for August (CET 8:00). Whereas we expect a further normalisation of the index that measures producers’ prices of goods manufactured and sold in Sweden (HMPI), the index containing import prices might show a less favourable development, given the increase in oil prises during august. Riksbank’s Per Jansson will hold a lecture on the Riksbank’s objectives and tasks later today (CET 18:00).
