The EU Divorce Bill, Trump and Other Market News
Good Morning CMT Traders
FOMC minutes provided markets with little in the way of traction as the release failed to present markets with much in the way of new information.
• Asian equity markets traded mostly lower following a subdued lead from Wall St. with Chinese trade data also hampering sentiment
• Looking ahead, highlights include German CPI, US Weekly Jobless Claims, DoE Crude Oil Inventory Report and comments from Fed's Harker
• Voting policymakers noted a reasonable case for hiking in September or waiting for data.
• Many of the voting members noted that there were few signs of inflation pressure and that progress on inflation was slow.
• Some of the voting members said that a cautious approach to hiking could help the labour market heal more.
Overall, the minutes saw a muted reaction across major US asset classes, as they provided little in terms of additional insight into the thinking of the Fed. CME FFR futures were relatively unchanged with only some modest USD weakness observed initially on the inflation commentary, while US equity futures continued a gradual retreat in the hours after.
The Asian equity markets traded mostly lower following a subdued lead from Wall St. where stocks pulled back after a relatively uneventful FOMC minutes release, while weak Chinese trade data also dampened sentiment. ASX 200 (-0.7%) was dragged by commodity names after oil prices retreated below USD 50.00/bbl following a lack of developments at producer talks in Istanbul and a build in API crude inventories. Nikkei 225 (-0.4%) failed to hold on to early gains alongside swings in USD/JPY, while discouraging Chinese data in which trade balance fell to a 6-month low and exports unexpectedly contracted pressured the Hang Seng (-1.2%) and Shanghai Comp (Unch.), although the latter narrowly remained afloat following recent announcements to support investment growth in the mainland. The poor trade figures also weighed on US equity futures which saw E-mini S&P retreat below a key 2120.00 support level while Dow futures dropped over 100 points.
Chinese Trade Balance (CNY)(Sep) M/M 278.4bln vs. Exp. 364.5bln (Prev. 346.0bln)
– Chinese Exports (CNY)(Sep) Y/Y -5.6% vs. Exp. 2.5% (Prev. 5.9%)
– Chinese Imports (CNY)(Sep) Y/Y 2.2% vs. Exp. 5.5% (Prev. 10.8%)
Chinese Trade Balance (USD)(Sep) M/M 42.00bln vs. Exp. 53.00bln (Prev. 52.05bln)
– Exports (USD)(Sep) Y/Y -10.0% vs. Exp. -3.3% (Prev. -2.8%)
– Imports (USD)(Sep) Y/Y -1.9% vs. Exp. 0.7% (Prev. 1.5%).
The Peoples Bank of China injected CNY 20bln 7-day reverse repos.
Peoples Bank of China set mid-point at 6.7296 (Prev. 6.7258).
The Bank Of Japan is likely to be reduce its CPI forecast for FY2017/2018 in their next quarterly report to the bottom 1.0% zone from current 1.7% and could delay the timing to reach 2% price target, according to Japanese press reports.
ECB may review options on QE program, including temporary deviation from the capital key and buy some bonds with yields beneath the deposit rate, although it may delay the decision until December, according to sources.
U.K RICS House Price Balance (Sep) M/M 17.0% vs. Exp. 14.0% (Prev. 12.0%).
The United Kingdom is said to be facing an EU divorce bill of up to EUR 20bln to cover its part of the over EUR 300bln of shared liabilities which need to be settled, according to estimates in the Financial Times.
USD/JPY initially began Asia trade firm and advanced above 104.00 to print fresh 2½ month highs. However, the pair then failed to maintain its gains and retreated back below 104.00 after poor Chinese trade data triggered safe-haven flows into JPY. Commodity-linked currencies were weaker following a drop in oil prices and in the wake of the data which also dragged CNH to its weakest since January, while the situation in Thailand continued to pressure the THB after the Royal Palace announced that the king’s medical condition remained unstable.
Oil prices continued to pull back following a build in API crude oil inventories and after producer talks in Istanbul were inconclusive which saw WTI retreat below USD 50.00/bbl. Gold (+0.6%) was up as participants looked to the safe-haven following weaker than expected Chinese trade data, while copper fell alongside the risk averse sentiment seen in Asia.
U.S API Crude Oil Inventories (Oct 7) W/W 2700K (Prev. -7600K).
PIMCO increased its US government bond holdings in September to 44.6% from 43.1%.
NY Daily News front page article stated that Donald Trump made an inappropriate comment/joke regarding an underage girl, while an article in NY Times stated that 2 women claim that Donald Trump had touched them inappropriately in the past.
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