Drivers for the Week Ahead

Blog icons-DRIVERS

  • Politics dominate the agenda this week and in the run-up to the ECB meeting on October 26
  • Trump’s nomination of the next Federal Reserve Chair is expected any day
  • The 19th Chinese Communist Party Congress begins Wednesday
  • Japan goes to the polls on October 22
  • We warn that politics will be an important factor behind some divergences within EM FX

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Discipline Argues Against Consensus Narrative

new build

  • The market has come to accept a December rate hike, just as it had to be led by the hand to recognize the March hike
  • The enthusiasm for Spanish assets is somewhat diminished today
  • In addition to the euro’s streak, there is another notable streak underway:  Japanese stocks
  • Singapore August retail sales rose 3.5% y/y; MAS expected to remain on hold tomorrow
  • India reports September CPI and August IP; Peru central bank is expected to keep rates steady at 3.5% Continue reading

Markets Looking for a New Focus

new bulbs

  • Spanish assets are rallying following Puigdemont’s attempt to square the circle yesterday by deferring the independence announcement
  • New revelations came from Japan’s Kobe Steel that its deception of its materials extends beyond copper and aluminum
  • The highlight from the US today will be the FOMC minutes from the September 20 meeting
  • MXN is the second worst performer in EM this week (behind TRY) on NAFTA concerns
  • Taiwan reported strong September trade overnight; Brazil August retail sales are expected to rise 4.4% y/y

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From the Securities Lending Trading Desk

In the Americas, we are seeing strong broker demand for Roku Inc. as the share price fell roughly 20%, reversing the nearly 90% gain over the first two days of trading. This week, shares for Japan Display Inc. group soared a record amount after reports that affiliate, JOLED, is planning to raise funds for mass production of next-generation OLED panels. Meanwhile in Europe, Elis, the rental and cleaning company, will offer Convertible 2023 Bonds for up to EU400M.

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Dollar Pullback Extended

new shape

  • The momentum behind the “Party of Hope” has begun fading even as a new corporate scandal has exploded in Japan
  • The UK’s trade account continues to deteriorate
  • Catalonia’s President Puigdemont is slated to speak to the regional parliament early evening (early afternoon ET)
  • Russia Q2 current account is expected to move into deficit at -$2.8 bln; Chile reports September trade

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Drivers for the Week Ahead

Blog icons-DRIVERS

  • The US data highlight from the week ahead will be the CPI and retail sales report on October 13 
  • Spanish and UK politics are also impacting investors 
  • Polls suggest that the LDP will remain the largest party after the October 22 election 
  • EM FX ended the week under pressure, and that pressure persists as the new week begins 

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Look Through the US Jobs Report

new glasses

  • Investors will likely look through the US jobs report today
  • As the snap-election draws near (October 22), Japanese politics also come into focus
  • Like the US, Canada will also report its September employment figures today
  • Note that the rating agencies will be busy today
  • Chile September CPI is expected to remain steady at 1.9% y/y; Brazil September IPCA inflation is expected to rise 2.47% y/y Continue reading