ETX Capital Daily Market Bite, 9th January 2014: Pensive Financial Markets Wait For BOE/ECB Meetings
January 9, 2014 10:05 am
January 9th 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist.
Pensive markets this morning, waiting for central banks BOE and ECB to meet with decisions which are expected to be unchanged but could possibly yield some hints about the future of monetary policies. BOE likely to be a bit of a non-event, leaving the market to continue question if forward guidance needs to be adjusted to reflect the stronger growth in the UK last year and even stronger forecasted growth in 2014.
ECB a bit more tricky; deflation fears increased this week after CPI dropped again in the euro area, placing more urgency on Mr Draghi and friends to perhaps consider cutting the refi rate again or at least look at negative deposit rates. Other than those two risk-events, we have German industrial output which could bring some light after yesterday’s strong factory orders while in the US later, we have jobless claims ahead of tomorrow’s nonfarm payrolls.
US ADP report yesterday blew the doors off but not always an accurate indicator for jobs growth — that said, it certainly has ramped up expectations for a solid jobs number on Friday, reaffirming the improving conditions in the labour market and justifying the Fed’s decision to start tapering this month. Fed minutes were released last night, showing the central bank will be cautious in its tapering measures and will keep interest rates at record lows for the foreseeable future.
No big surprise there for markets who are now looking for a beefier forward guidance with some credible thresholds when Janet Yellen takes the helm. Across markets; equities weaker [FTSE100 down 13 points, EUROSTOXX50 off 3 points], sterling and euro firmer as are commodities [gold up 20 cents, Nymex and Brent both up around 30 cents] peripheral bond yields behaving themselves whilst core government bonds [UK gilts and German bunds] are under pressure as appetite for risk comes back on board.
January 9th 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist.
Pensive markets this morning, waiting for central banks BOE and ECB to meet with decisions which are expected to be unchanged but could possibly yield some hints about the future of monetary policies. BOE likely to be a bit of a non-event, leaving the market to continue question if forward guidance needs to be adjusted to reflect the stronger growth in the UK last year and even stronger forecasted growth in 2014.
ECB a bit more tricky; deflation fears increased this week after CPI dropped again in the euro area, placing more urgency on Mr Draghi and friends to perhaps consider cutting the refi rate again or at least look at negative deposit rates. Other than those two risk-events, we have German industrial output which could bring some light after yesterday’s strong factory orders while in the US later, we have jobless claims ahead of tomorrow’s nonfarm payrolls.
US ADP report yesterday blew the doors off but not always an accurate indicator for jobs growth — that said, it certainly has ramped up expectations for a solid jobs number on Friday, reaffirming the improving conditions in the labour market and justifying the Fed’s decision to start tapering this month. Fed minutes were released last night, showing the central bank will be cautious in its tapering measures and will keep interest rates at record lows for the foreseeable future.
No big surprise there for markets who are now looking for a beefier forward guidance with some credible thresholds when Janet Yellen takes the helm. Across markets; equities weaker [FTSE100 down 13 points, EUROSTOXX50 off 3 points], sterling and euro firmer as are commodities [gold up 20 cents, Nymex and Brent both up around 30 cents] peripheral bond yields behaving themselves whilst core government bonds [UK gilts and German bunds] are under pressure as appetite for risk comes back on board.
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