TradeTheNews.com Weekly
Market Update: Markets Clear Hurdles of Central Bank Policy Risk
Fri, 23 Sep 2016 16:03 PM EST
Coming into the week, focus was squarely on two key Central Bank meetings.
Equities drifted higher and global bond prices stabilized leading into the BOJ
and FOMC announcements on Wednesday. The Bank of Japan surprised many observers
when it formally changed course introducing yield curve control and inflation
overshooting policies. Investors' increased willingness to add risk was evident
globally and was only intensified by the US Federal Reserve announcement a few
hours later. The FOMC left rates unchanged exasperating some who felt the
window was there for the Fed to take the next step in the slow process of
normalizing rates. Despite three hawkish dissenters in the decision, markets
took solace from the updated forecast that plotted rates staying lower for even
longer than they had previously thought.
With the risk of central bank induced turmoil behind it, the market settled
back in to risk on mode for the balance of the week. By Thursday, the NASDAQ
was touching fresh all-time highs, and for the week, the S&P500 gained
1.2%, the DJIA added 0.8%, and the Nasdaq was 1.2% higher. Treasury markets
rallied in tandem while curves flattened as investors moved back into the long
end. The benchmark US 10-year yield fell towards 1.6% after entering the weak
at 1.7%.
Crude prices stabilized early in the week helped by a deluge of press reports
surrounding producers. OPEC members met in Vienna ahead of next week's Algiers
meeting and there was no shortage of jawboning by officials. Momentum appears
to be building for some kind of agreement on a production freeze, but Iran and
Saudi Arabia remain at odds on what yardstick will be used in determining high
water output marks. On Friday, the price of WTI slipped back below $45 after
the Saudis said they do not to expect any formal decision from Algiers next
week.
In corporate news there was intrigue around Apple's plans for the auto market
again, with a report that it could consider buying supercar maker McLaren.
Later in the week Apple shares were dragged lower on more concerns about
interest waning in the iPhone 7. Shares of Twitter jumped 20% on Friday after a
report that the social media firm was stepping up efforts to sell itself and
had attracted some early interest from Google and Salesforce.com. The IPO
market was seeing a renaissance with several notable deals pricing favorably
and posting big first day gains including Apptio Inc. and Elf Cosmetics.
SUNDAY 9/18
(EU) Italy PM Renzi: Germany, France, and Spain are not following EU rules on
trade and deficit control - Italian press
MONDAY 9/19
*(US) SEPT NAHB HOUSING MARKET INDEX: 65 V 60E
HNI: Cuts Q3 $0.74-0.79 v $0.95e (prior $0.90-0.95), cuts FY16 $2.50-2.70 v
$2.87e (prior $2.80-2.95)
TUESDAY 9/20
*(HU) HUNGARY CENTRAL BANK (NBH) LEAVES BASE RATE UNCHANGED AT 0.90%; AS
EXPECTED
(US) AUG HOUSING STARTS: 1.14M V 1.19ME; BUILDING PERMITS: 1.14M V 1.17ME
(HU) Hungary Central Bank Gov Matolcsy: to limit size of 3-mo deposits at
HUF900B at Oct - Post Rate Decision Statement
FDX: Reports Q1 $2.90 v $2.79e, R$14.7B v $14.4Be
WEDNESDAY 9/21
(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER)
UNCHANGED AT -0.10% (AS EXPECTED); CHANGES POLICY FRAMEWORK TO "QQE WITH
YIELD CONTROL"
DGE.UK: Issues trading update: FY17 has started well
(JP) BOJ Gov Kuroda: Easing made Japan no longer in deflationary state - post
rate decision press conference
(UK) AUG PUBLIC FINANCES (PSNCR): +£0.7B V -£2.1B PRIOR; PUBLIC SECTOR NET
BORROWING: £10.1B V £10.3BE
AAPL: Reportedly in talks with sports car maker McLaren over potential
acquisition - FT
(US) FOMC HOLDS TARGET RATE RANGE AT 0.25-0.50%: AS EXPECTED; NEAR-TERM RISKS
APPEAR ROUGHLY BALANCED; STRONGER CASE FOR HIKE BUT WAITING FOR MORE EVIDENCE
(US) FOMC UPDATED ECONOMIC FORECAST FOR SEPT MEETING; lowers 2016 GDP forecast;
lowers 2016 PCE inflation forecast; raises 2016 unemployment forecast
(US) Fed Chair Yellen: seeing solid increases in household income and consumer
sentiment - FOMC press conf
(US) Fed Chair Yellen: seeing definite evidence economy is expanding more
strongly after weak H1; unemployment rate is close to equilibrium - FOMC press
conf Q&A
(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE UNCHANGED AT
2.00%; AS EXPECTED
(AU) RBA Gov Lowe: Flexible medium term inflation target remains the right
monetary policy; inflation to remain low for some time
THURSDAY 9/22
MAERSKB.DK: To separate into 2 division; Announces progress update on strategic
review and change of management
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS
EXPECTED
(PH) PHILIPPINES CENTRAL BANK (BSP) LEAVES OVERNIGHT BORROWING RATE UNCHANGED
AT 3.00%, AS EXPECTED
(ID) INDONESIA CENTRAL BANK (BI) CUTS 7- DAY REVERSE RATE (NEW BENCHMARK RATE)
BY 25BPS TO 5.00%; AS EXPECTED (5TH CUT IN 2016)
(UK) SEPT CBI TRENDS TOTAL ORDERS: -5 V -5E
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT
7.50%; AS EXPECTED; again narrows rate corridor (as expected)
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) LEAVES INTEREST RATE UNCHANGED AT 7.00%;
AS EXPECTED
(US) AUG EXISTING HOME SALES: 5.33M V 5.45ME
ELF: IPO opens for trade at $24.00
YHOO: Confirms certain data from over 500M user accounts stolen, believed to be
by a state-sponsored actor; stolen data includes hashed passwords, names and
email addresses
BATS: CBOE reportedly in discussions to acquire BATS Global - press
FRIDAY 9/23
(FR) FRANCE SEPT PRELIMINARY MANUFACTURING PMI: 49.5 V 48.5E (highest reading
in 6 months and 7th straight contraction)
(KR) South Korea Fin Min Yoo: Says 90% of Hanjin ships to offload by end of
October - statement
(DE) GERMANY SEPT PRELIMINARY MANUFACTURING PMI: 54.3 (22nd month of expansion)
V 53.1E
(EU) EURO ZONE SEPT PRELIMINARY MANUFACTURING PMI: 52.6 (39th month of
expansion) V 51.5E
AAPL: iPhone 7 chip orders said to have likely fell in Q1 - press
(SA) Saudi Arabia ready to reduce output if Iran agrees to freeze production at
current levels of 3.6M bpd - financial press
(US) Fed's Rosengren (moderate, FOMC voter): not doing modest, gradual
tightening now will put recovery's duration and sustainability at greater risk
- statement on FOMC dissent (was 1 of 3 dissenters)
TWTR: CNBC's Faber: Twitter reportedly moving closer to a sale; suitors include
Google and Salesforce
(US) SEPT PRELIMINARY MARKIT MANUFACTURING PMI: 51.4 V 52.0E
VVV: IPO opens for trade at $24.10
APTI: IPO opens for trade at $23.40
(US) Weekly Baker Hughes US Rig Count: 511 v 506 w/w (+0.9%)
