Chillin' out till it needs to be funded
The Fed however makes another case for not doing anything this Wednesday and the markets have already responded taking US safe haven bonds to their first score below 2% on the ten year bond. Oil prices will definitely hit a trading flurry to below 60 and stay there as bigger investors enjoy their well timed muscle move on the Dollar and on Oil with OPEC opting for a price war to settle their latest worries on Oil price. Despite the twin attack, James Bullard with the other Federal Reserve board members are likely to support Yellen in keeping rates low till mid 2015. In a recent presentation, Bullard had raised the issue of an early rate hike but noted diligently in this week’s presentation that US inflation rates have indeed nosed up despite the Oil price breakdown. Low inflation, remains the proverbial straw that could break the camel’s back, given the scenario playing out in the bond markets but US rate is probably on the verge of a breakout growth given the fiesty response from Consumers to the falling oil prices.
The Housing index report from NAHB is widely followed and starts the week’s big ticket pushes to the markets hoping for the Economic breakout to translate into a higher index jump, but look for a lower market open nonetheless on a mix of fears of the Fed action and continuing speculative push driving the Dollar up and inflation into negative territory on Monday. The CPI report, much more positive comes out on Wednesday
The Housing index has been pushing higher to record levels on New Home Sales even as traffic stays down and has been dipping steeply for all of 2014 and that means probably more investors buying even as the better employment conditions stay limited to a couple of states like, and actually only, North Dakota. The Housing Starts and permits data on Tuesday will remain murky while the Current Account Deficit report on Wednesday is likely expected to be an outperformer after a small $56 Bln in the new fiscal’s first report in October.
Wednesday’s Yellen report and presser will likely bring everyone back to daily rituals of hope and panache in the markets, more attention on boring Jobless Claim reports and Purchase indices while the PMI Manufacturing report on Tuesday may well be ignored for the post conference Services PMI report before the week closes with the Kansas Fed reaffirmation of Midwest health of new jobs and the economy
Economic Data from Germany and others is unlikely to stop or start the continuing rush down in the Euro and the currency markets are likely to avoid much movements for now but the Euro is not likely toi stay above 1.22 and the Yen is likely to go higher(lower) to 130 levels too after more support for Abenomics ignoring Japan’s technical cut into recession in the last GDP report.
Meanwhile China has perked up on the deals front, China Construction Bank finally using some of its $15 Bln kitty, with the BicBanco deal in Brazil and Haitong securities stepping into in Lisbon to buy Banco Espirito Santo’s IB (residual error of good faith>?) Also, Fitch is now more or less fully owned by Esquire owners Hearst.
Of course the week after that is Christmas so there would not be many announcements till the New Year from us or others and there is some time there for good Football and late online shopping as Cyber Monday continues now on in perpetuity and Consumers get wiser to “Holiday shopping” in the new world.