ON DECK FOR MONDAY, OCTOBER 25
KEY POINTS:
- Quiet markets to start an active week
- PBOC injects highest amount of liquidity since January
- German business confidence slips
- US after-market earnings risk
- Global Week Ahead
As a reminder, please see the Global Week Ahead—Managing Markets (here). Key developments this week will be focused upon:
- BoC preview
- ECB to push back?
- Is US consumer confidence a warning shot?
- Earnings fan out with big names
- CBs: Brazil, Colombia to hike, BoJ to snooze
- GDP: US, Canada, EZ, Mexico, Sweden, SK, Taiwan
- Inflation: US, EZ, Australia, Japan
- Other macro
Monday offers a very quiet start to a potentially active trading week with several central banks and key earnings reports on tap. Overnight developments were light and that’s likely to persist through to at least the earnings after market.
Stocks are little changed on average including across N.A. futures. London is up ½% as the main upside performer. Mainland China’s equities initially slipped but then rallied ¾% mostly on the back of the PBOC’s injection. The US Treasuries, Canada and gilts curves are slightly bear steepening but most other curves are little changed. The USD is also little changed. Oil is up by just under 1% with Saudi Arabia’s oil minister cautioning against higher production.
The PBOC injected the highest amount of liquidity into markets since last January (chart 1). 200 billion yuan was injected through 7-day reverse repo which netted 190 billion after small maturities. Some of this is thought to be oriented toward month-end funding requirements including requirements for tax payments and government bond issuance.
German IFO business confidence slipped a touch through the expectations component that has reversed most of the rise that had occurred this year.
There is nothing material on tap in the US or Canada this morning. Facebook releases earnings in the after-market.
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