With the Pacific G10 Macro Rates Team
Equities finished the week lower with fixed income markets unchanged, and oil closed below $40. VIX returned to mid-20s after spiking close to 40 the week earlier, as risk assets stabilised. Central Banks didn’t deliver any changes as expected.
Bank of Canada (BoC) and European Central Bank (ECB) left their short-term interest rate targets and QE programmes unchanged. However, both Central Banks sounded more upbeat on the recovery as stronger than expected economic data for Q3 forced policymakers to revise their forecasts up (mostly as a function of reduced downside risks).
Brexit negotiations were in the headlines again last week. The UK Government proposed an Internal Market Bill that will regulate trade between Northern Ireland and the rest of the UK. Parts of the Bill violate that the agreement that UK signed less than one year ago with the EU. Sterling had it’s worst week since March, as Boris Johnson was put under pressure to respect the original agreement by MPs from both sides of Parliment.
US: CPI report for August was the main data print, Ex Food and Energy increased MoM 0.4% (0.2% exp., 0.6% prev.). Jobless claims were slightly weaker than expected with Initial Jobless Claims raising by 884k (850k exp., 881k prev.) and Continuing Claims increasing 13385k (12904k exp., 13254k prev.).
Canada: Bank of Canada left the rates unchanged and left QE policy unchanged. However due to improved outlook, commitment to further actions was removed.
Eurozone: ECB left interest rates and QE policy unchanged with little changes to the language. CPI increased 2.4% YoY in August (2.4% exp., 2.7% prev.). Industrial Production data for July was mixed across the Eurozone. In Germany it increased 1.2% (4.5% exp., 8.9% prev.), in France 3.8% (5.0% exp., 12.7% prev.), in Italy it was up 7.4% (3.5% exp., 8.2% prev.) and in Spain it increased 9.3% (3.5% exp., 14.0% prev.). Manufacturing Production in France increased 4.5% in July (3.5% exp., 14.4% prev.). July Retail Sales in Italy were slightly weaker -2.2% (-1.0% exp., 12.1% prev.).
Sweden: CPIF Excl. Energy dropped -0.5% in August (-0.4% exp., 0.4% prev.).
Norway: Mainland GDP increased less than expected in July 1.1% (2.0% exp., 3.7% prev.). CPI was stronger in August -0.4% MoM (-0.7% exp., 0.9% prev.). Jul Industrial Production was up 2.5% (-2.2% prev.).
Aug Preliminary Machine Tool Orders were down -23.3% YoY (-31.1% prev.) Jul Core Machine Orders MoM 6.3% (2.0% exp., -7.6% prev.) Jul Core Machine Orders YoY -16.2% (-18.1% exp., -22.5% prev.).
BRC Like-For-Like Sales were up 4.7% YoY in August (3.5% exp., 4.3% prev.). Monthly GDP was in line with expectations in July increasing 6.6% (6.7% exp., 8.7% prev.) RICS House Price Balance increased 44.0% in August (25.0% exp., 12.0% prev.). Industrial Production increased 5.2% in July (4.1% exp., 9.3% prev.). Manufacturing Production increased 6.3% MoM in July (5.0% exp., 11.0% prev.). Construction Output increased 17.6% MoM in July (10.0% exp., 23.5% prev.). Index of Services 6.1% MoM in July (7.0% exp., 7.7% prev.).
Australia: Sep Westpac Consumer Confidence Index 93.8 (79.5 prev.) and Sep Consumer Inflation Expectation 3.1% (3.3% prev.).
New Zealand: September ANZ Business Confidence improved to -26 (-41.8 prev.), Aug Card Spending dropped -7.9% (1.2% prev.) and Aug REINZ House Sales YoY increased 24.8% (24.6% prev.).
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