TradeTheNews.com Weekly
Market Update: US Gets "Goldilocks" Jobs Report; Brexit Redux and ECB
Tapering Are Latest Worries for Europe
Fri, 07 Oct 2016 16:09 PM EST
October trade kicked off in an orderly manner but as the week progressed many
of the same underlying cross currents returned to the surface resulting in
market swings. WTI crude futures gained a foothold above $50 for the first time
since early July helped by generally improved ISM data globally and large
declines in weekly crude inventory figures. The British Pound continued to fall
to fresh 3 decade lows largely on the backs of tough talk from various European
officials surrounding Brexit. The move culminated in what many referred to as a
"flash crash" into the Asian trading session on Friday. Cable trades
briefly printed below 1.20, down some 10 big figures before rebounding into the
US open.
Global rates backed up to some of the highest levels since the Brexit vote
ahead of the US payrolls report on Friday, spooked in part by a mid-week report
that suggested ECB was already discussion QE tapering scenarios. That report
was later walked back by several ECB officials but sovereign bond prices never
fully recovered. Friday's September payrolls report was described by several
analysts, including Fed Vice Chair Fischer, as a "goldilocks" number,
not too hot, not too cold. The implication was that the Fed will remain on hold
in November and remains on track for a December rate move. The UK 10-year Gilt
yield finished the week just below 1% while the 10-year Treasury held near
1.75%. Gold prices careened down through the 200-day moving average weighed on
by higher rates and a resurgent US dollar.
Deutsche Bank remained in focus as each day saw vying press reports on the
company's travails. Last week's lows held and hopes are the bank, along with US
and German government officials can reach a path forward that will allow DB to
recapitalize. Twitter shares topped $25 mid-week before sliding on reports that
several potential suitors dropped out. The IPO market stayed hot, headlined by
Coupa Software's 100% rise on Wednesday and word that the thawing market had
both Snapchat and Bloom Energy nearing a filing. The week also saw the launch
of Innogy, the largest IPO in the German stock market in nearly a decade.
Disappointing annual guidance from Honeywell and Walmart weighed on the major
US indices late in the week along with a steady rotation out of higher yielding
defensive sectors. The S&P futures saw the 50-day moving average set up as
notable resistance throughout the week's trade. For the week, the S&P500
lost 0.7%, the DJIA slipped 0.4%, and the Nasdaq fell 0.4%.
SUNDAY 10/2
10/02 14:11:17 TSLA: Reports Q3 deliveries 24.5K (record high from any quarter)
vehicles, +70% q/q; 15.8K were Model S and 8.7K Model X; Production +37% q/q to
25.2K units
(HK) Macau Sept casino revenue 18.4B patacas v 18.8B m/m, y/y: +7.4% (2nd
straight increase after 26 months of decline) v +1.1% prior
MONDAY 10/3
(UK) SEPT PMI MANUFACTURING: 55.4 V 52.1E (2nd month of expansion, highest
reading since Nov 2015)
(US) SEPT FINAL MARKIT MANUFACTURING PMI: 51.5 V 51.4E (lowest reading since
Jun)
(US) SEPT ISM MANUFACTURING: 51.5 V 50.3E; PRICES PAID: 53.0 V 53.5E
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET AT 1.50%; AS
EXPECTED
TUESDAY 10/4
ERICB.SE: Confirms to cut ~3-4K employees (~3% of total workforce); to hire 1K
R&D positions mainly from universities
(IN) INDIA CENTRAL BANK (RBI) CUTS REPURCHASE RATE BY 25BPS TO 6.25%; NOT
EXPECTED
(US) IMF UPDATES WORLD ECONOMIC OUTLOOK (WEO): Maintains 2016 global growth
forecast at 3.1%
(US) Sept ISM New York: 49.6 v 47.5 prior
(EU) ECB QE tapering scenarios reportedly include slowing by increments of
€10B/month; timing on tapering to depend on economic outlook - press
MU: Reports Q4 -$0.05 v -$0.12e, R$3.22B v $3.11Be
(US) Weekly API Oil Inventories: Crude: -7.6M v -0.8M prior (3rd straight draw;
largest draw since Sept 7th)
WEDNESDAY 10/5
TSCO.UK: Reports H1 adj PBT £410M v £183M y/y, Op £596M v £523Me, Rev (ex Fuel)
£24.4B v £23.7B y/y
(US) SEPT ADP EMPLOYMENT CHANGE: 154K V 165KE
(US) SEPT FINAL MARKIT SERVICES PMI: 52.3 V 51.9E (highest since April)
(US) SEPT ISM NON-MANUFACTURING COMPOSITE: 57.1 V 53.0E
(US) AUG FINAL DURABLE GOODS ORDERS: 0.1% V 0.0%E; DURABLES EX TRANSPORTATION:
-0.2% V -0.4% PRELIM
YUM: Reports Q3 $1.09 v $1.09e, R$3.32B v $3.52Be; Raises FY16 op profit growth
guidance to at least 15% from 14% prior forecast
LRCX: Terminates proposed combination with KLA-Tencor
TWTR: Google does not plan to make an offer for Twitter; Apple bid also said to
be unlikely - Recode
THURSDAY 10/6
Nov WTI crude futures move above $50/bbl for the first time since July 7th
Dec gold futures test 200-day moving average
(EU) ECB's Constancio (Portugal): earlier report ECB was near tapering
consensus is not correct; QE to go until inflation is back on path to target -
press
005930.KR: Reports prelim Q3 Op profit KRW7.8T v KRW7.6Te, Rev KRW49.0T v
KRW51.0Te
(CN) CHINA SEPT FOREIGN RESERVES: $3.166T V $3.183TE; 3rd consecutive decline,
biggest monthly drop in 4 months multi-year lows
FRIDAY 10/7
(FR) FRANCE AUG INDUSTRIAL PRODUCTION M/M: +2.1% V +0.6%E; Y/Y: +0.5% V -1.3%E
*(FR) FRANCE AUG MANUFACTURING PRODUCTION M/M: +2.2% V +0.3%E; Y/Y: +0.7% V
-1.4%E
*(UK) AUG MANUFACTURING PRODUCTION M/M: +0.2% V +0.4%E; Y/Y: 0.5% V 0.8%
(UK) AUG INDUSTRIAL PRODUCTION M/M: -0.4% V +0.1%E; Y/Y: 0.7% V 1.3%E
*(CA) CANADA SEPT NET CHANGE IN EMPLOYMENT: +67.2K V +7.5KE; UNEMPLOYMENT RATE:
7.0% V 7.0%E
(US) SEPT CHANGE IN NONFARM PAYROLLS: 156K V 172KE
*(US) SEPT AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 2.6% V 2.6%E;
AVERAGE WEEKLY HOURS: 34.4 V 34.4E
*(US) SEPT UNEMPLOYMENT RATE: 5.0% V 4.9%E
(US) Weekly Baker Hughes US Rig Count: 524 v 522 w/w (+0.4%)
