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Dentalfloss · Oct 25, 2019

Dentalfloss · Oct 25, 2019

Good Morning: The Long & the Short of it and The Bigger Picture - 25 October 2019 - ADM ISI

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Ostwald, Marc

08:29 (30 minutes ago)

to Marc

- Rather subdued scheduled of data, events & earnings to end the week;
digesting Singapore Production & German Consumer Confidence, awaiting
Ifo Business Climate, Sweden Retail Sales, Russia rate decision &
EU UK Article 50 extension

- Ifo Business Climate: current assessment seen falling further, expectations
expected to start troughing

- Russia rates: after hefty hint from Nabiullina, 50 bps cut more likely
than 25 bps

- Week Ahead: Fed, BoJ & BoC meetings, US & Eurozone Q3 GDP, Eurozone &
Oz CPI; GM strike expected to hit Payrolls

- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-25-october-2019/

** Please note that, due to my taking a short break from the office, there will be no Week Ahead this week
or any updates from me on Monday or Tuesday. **

..........................................................................

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** EVENTS PREVIEW **
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There is a very modest schedule of data and events to end the week, and that is perhaps a good thing, as markets appear to be unable to react to anything, if this week's non-existent price action is anything to judge by, above all in major FX pairs. Statistically there are the Singapore Industrial Production and German GfK Consumer Confidence to digest ahead of the Ifo survey. The ECB publishes its Survey of Professional Forecasters ahead of an expected rate cut in Russia, and there are some Norges Bank and Riksbank speakers. A modest run of corporate earnings features amongst others Barclays, Eni, Goodyear and Verizon. As ever politics and trade tensions will continue to be the primary sources of any surprises.

Following on from as expected but very weak Manufacturing PMI, and the soft Services PMI, today's German Ifo Business Climate is seen edging down to 94.5 from 94.6, led lower by an anticipated fall in the Current Assessment to 98.0.

Russia's Bank Rossi is expected to cut rates again by 25 bps to 6.75%, with governor Nabiullina suggesting last Friday that it could cut rates more 'decisively' because inflation risks have not materialized, suggesting a 50 bps cut is a strong possibility. Specifically Nabiullina opined "Usually, you know, the central bank of Russia prefers to adjust the key rate at a moderate pace. However, when we see that ... the data can change our forecasts significantly, we can adjust our monetary policy more decisively."

Next week obviously sees month end, but also has Fed, BoJ and BoC policy meetings and a further raft of corporate earnings in the US and around the world, as well a lot of major data. A Fed rate cut is almost fully discounted despite a good deal of ambivalence, even resistance from many Fed speakers; the BoJ remains quite heavily split, and will doubtless view solid domestic demand, quiet markets and the US/China trade truce as good reasons not to expend its very limited policy ammunition. As for the Bank of Canada, the minority Trudeau's govt promise of a fiscal boost for the economy before the election, and the need to attract support from left-leaning parties post-election, along with a modest uptick in last week's Q3 BoC Business Outlook has prompted markets to almost completely price out any chance of a rate cut this year. Statistically the US, Eurozone, France, Italy and Spain all have advance Q3 GDP reports, the US also has its labour data (which like yesterday's Durable Goods orders will likely see large drag from the GM UAW strike), Consumer Confidence, Goods Trade Balance and monthly Personal Income / PCE. The Euro area has national and Eurozone CPI data, with a number of countries closed for All Saints on Friday. Japan looks to Retail Sales, Tokyo CPI and Industrial Production, while Australia has Q3 CPI.

** Please note that, due to a short break from the office, there will be no Week Ahead this week or any updates from me on Monday or Tuesday. **

========================== ** THE DAY AHEAD ** ======================