ON DECK FOR FRIDAY, SEPTEMBER 12
KEY POINTS:
- Markets cautious ahead of a week packed with central banks
- UK economy put in a mixed performance; markets shrugged
- Peru’s central bank cut and signals it may be done
- Russian central bank disappoints forecasters
- US UofM sentiment the lone N.A. release
The week is ending with a cautious mood across markets ahead of a week packed with global central bank decisions. Bonds and stocks are both slightly cheapening this morning. EGBs and gilts are underperforming US Ts but a few basis points but they’re not major moves. Equities are mildly lower across most exchanges outside of London. The dollar is broadly stronger, with the lone exception being the Taiwan dollar due to potentially encouraging trade negotiations with the US and a supportive fiscal package.
UK ECONOMY PUT IN A MIXED PERFORMANCE
UK macro releases were of little consequence to sterling and gilts. That may be partly because it’s lagging data and because the readings were mixed. GDP was flat in July over June as expected and not surprisingly after the prior month’s jump (chart 1). Industrial output fell -0.9% m/m (0% consensus) as manufacturing plunged by -1.3% m/m. The monthly services index outperformed at +0.1% m/m (0% consensus) and so did construction output (+0.2%, -0.2% consensus). Exports were up 2.3% m/m and imports were up 2.4%; strip out precious metals like the London gold trade and exports were still up 2.3% but imports were up more (3.4%).
PERU’S CENTRAL BANK CUT AND IS ALMOST DONE
Peru’s central bank cut its reference rate by 25bps as widely expected last evening. The approaching end of the easing cycle was signalled by flagging how the rate is “very close” to neutral and that inflation is expected to land in the middle of the 1–3% target range by year-end.
RUSSIAN CENTRAL BANK CUT
Russia’s central bank disappointed forecasters by cutting by 100bps this morning. Consensus had expected double that amount. Cumulative easing since it began in June now stands at -400bps with the rate set at 17%.
UOFM THE LONE N.A. RELEASE
In N.A., US UofM sentiment will be watched (10amET). It’s more market and cash flow oriented than the Conference Board’s consumer confidence reading that is more labour market oriented. Also watch its inflation expectations components (chart 2).
Stephen Miran’s Senate confirmation vote is likely on Monday. He’s very likely to pass and to be at the Tuesday-Wednesday FOMC meeting as a voting Governor. Whether Lisa Cook will be remains in doubt given legal proceedings between now and then, but I’d guess she probably will be.
And then all heck breaks out next week with a long list of central banks and key data like Canadian CPI, US retail sales, Aussie jobs etc. See my Global Week Ahead later today.
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