Thursday, July 21: Five Things the markets speak of
Not really and this is the majority view. Businesses as usual that Euro policy makers await more data. However, many believe Euro officials may signal such a move is on the cards for September the 8th meeting of the bank. Draghi expect to be questioned about Brexit and its potential impact in his press conference at 08 :. 30EDT
Despite natural lull this morning on the market before the interest rate announcement by the ECB, the good times continue for most equity investors. global equity indices remain in the "black", fueled by a series of data releases highlighting the strength of the US economy, earnings and expectations of further measures by the central bank of the following companies last month in the UK Brexit vote.
The financial markets require conviction for direction. A plethora of announcements of the central bank in the coming weeks should keep investors on the straight and narrow, beginning with the ECB today and any BoJ importance of the announcement of next week (July 28/29) where it is expected a new stimulus. Kuroda BoJ already has disappointed some market risk takers overnight stating that "helicopter money is not a possibility.
1. Japan fiscal stimulus flipped up ¥ 20T
The event risk for the Bank of Japan meeting next week (BoJ) is that Japanese makers do nothing. There is a small percentage of what is actually happening, especially if USD / JPY (¥ 106.00) continues its stoic rally. The market has been pricing in a BoJ movement with a strong fiscal stimulus the government of PM Abe to "reflation" the nation.
With the super-majority in the upper house of parliament after the last elections, it seems that Abe and his Cabinet continue to develop a large fiscal stimulus. Overnight reports from Japanese media now expect the tax package to at least ¥ 20T - up over ¥ 10T forecasts after the elections - as some projects will be long term and run into FY17 and beyond. It also expects the package to include at least + ¥ 9T public spending and loans.
The directional flow of yen one way was broken in trading overnight when BOJ Governor Kuroda said "helicopter money" was a no go. - USD / JPY fell aggressively after taking a nibble to ¥ 107.54 to ¥ 105.72 before the opening of the US
2. the Reserve Bank of New Zealand (RBNZ) reports further easing
another currency that has monopolized the spotlight in Australasia in the last two sessions was the Kiwi dollar (NZ $ 0.7000) .
Night and in their latest assessment of the economy, the RBNZ has given the clearest indication that the continuation of policy easing will be necessary and that a strong NZD is making it very difficult for policy makers to achieve their inflation targets, particularly given the significant decrease risk to global growth. Brexit is the unknown variable and has not proven its economic impact.
Policymakers tend to cover and produce a balanced, at least until an action is required. For this purpose, the RBNZ also balanced their concerns politics becomes too easy to assessing inflation in the long term as "balanced".
Last week, the RBNZ probably took the last step needed to remove a barrier to more acceleration in coming months when they meet expanded its macro restrictions LVR nationwide. Kiwi inflation risks in the property market were the main obstacle to further easing. At present, some dealers fixed income began to price in two movements in rates before the end of 2016, starting with August 11 meet.
3. Hang Seng in the territory "Bull"
expectations of the central bank are the main driver behind the rally action ; coupled with good gains this week U.S trend indicators is to keep that momentum.
Hong Kong stocks pushed the bull market territory overnight. The Hang Seng Index closed up 0.5%, and rose in eight of the last nine trading sessions.
Unlike its European counterparts where financial services and commodities tend to lead the way this week, property stocks also helped the recent gains of the benchmark index (+ 2.7% ). Today's gains pushed the Hang Seng Index in positive territory for the year to date. From its low in mid-February, the benchmark is up more than 20%.
Elsewhere in Australasia, the Nikkei closed up 0.8%, Australia's S & P / ASX 0 was up 0.4% and Kospi in South Korea slipped -0.2%.
European stock markets want to get a handle on the ECB decision and press conference Draghi (0.8: 30 EDT) before resuming in a significant direction. Nevertheless, they opened fresh on the back of comments from Kuroda as "helicopter money" does not come.
4. consolidation gross
oil prices have consolidated yesterday's gains, as the continued withdrawal of US crude stocks seems to dominate the obvious increase in gasoline stocks.
However the oversupply is expected to continue his crude snowball effect, as the "glut" will be turned into a glut of gasoline and other fuels.
Both Brent and WTI dish gross trade in the Euro Session at $ 47.15 and $ 45.76 a barrel advance respectively on the open stateside.
prices leg yesterday after the US Energy Information Administration (EIA) data indicated that stocks crude contracted by -2.3m barrels (planned -1.3m). It was the ninth consecutive week to a levy. The data also showed that gasoline inventories rose + 00k barrels last week - which exceeds the limit of the average range.
Domestic demand in the U.S. last week was also helping crude prices. Daily demand is again back on + 20m barrels per day reference.
5. Obligations get an offer "small"
For risk takers, disappointing "helicopter" Kuroda's comments giving government bonds higher thrust. Return on U.S. 10-year note + 1.574% in trading against Euro + 1.50% near stateside.
However, the good Treasury yields continue to remain comfortably above where they were in early. July 8, U.S. 10 is closed for the day with a record low yield of + 1.366%. The low yield scenario is markets continued uncertainty about the health of the global economy and the course of Fed policy. US Treasuries in particular remain attractive with a record amount of negative return of sovereign debt in Japan and Europe.
While investors had all but a price on the chances of an increase in interest rates by the Fed this year after the Brexit vote, the chances that it could act as early as September were rampant up in recent days, following a series of strong US economic reports. Fed funds anticipating a chance + 20% rise in September and a chance of a rate move in December Fed + 40%.
The market knows that the Fed will tighten, but can it afford too?
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