Thursday, 15 October 2015

A few macro thoughts today

Just a few macro headline thoughts today as a busy earnings season Thursday.

Markets ‘market concerns are rising over divisions at the top of the Federal Reserve when to lift interest rates’ (FT).  No wonder this proportion is pushing up!


This uncertainty reflected in US10y yields closed <2%, reduced GDP forecast as JPM has cut Q3 hopes to 1% vs 1.5 and the U.S. Fed's Beige Book concluded ‘Economic Activity Continued To Expand Modestly From Mid-August Through Early October’.  Q3 estimates looking increasingly shabby...

No wonder the US dollar has been weaker: ‘This week has seen the biggest rally in GBP/USD on a Wednesday since 21 October 2009, 312 weeks ago / ‘EUR/USD has rallied for 5 days in a row adding 1.6%. The sequence of rallies has extended to 6 days once in the last 492 sessions’ (via Predicted Markets)

ECB - Keynote address by Vítor Constâncio, Vice-President of the ECB (link here). Main thoughts: Constancio Sees Monetary & Financial System At `A Sort Of Crossroads', Constancio Sees Euro Area Spillovers As Smaller Than Those Of US, Constancio Sees Risk Of `Durable Fragmentation' Of System.  Will more QE help?!

Debt - The Puerto Rico Electric Power Authority is at the end of its ninth extension to reach a deal with bondholders over $8.3 billion of debt. The territory is also reportedly in talks to issue a “superbond” to restructure its $72 billion in debt (via qz.com).  Meanwhile in August and September Moody’s issued 108 credit downgrades for US non-financial companies compared with just 40 upgrades.  Not easy credit times (so flow into sovereign bonds as per Treasuries above)

Global low inflation – good read here about ‘made in China lowflation’ (link here). 

Rise of China versus Russia – even in the latter’s backyard:


European retail sales/confidence…


…but I note the space ‘overvalued and overweight’ in the latest BoA-ML survey!  Makes me wonder if the above chart is highlighting potentially a triple top in confidence...



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