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OVERNIGHT MARKET
UPDATE:
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In the US, the NAHB housing market index increased
to 55 (mkt: 53) in August, from 53 in July, which was a seven month high. The
recent improvement in the NAHB index is encouraging and suggests that housing
market conditions may improve modestly going forward.
·
The Bundesbank monthly report struck a dovish tone
overnight. On Germany, the Bank noted that“expectations for a strengthening
of economic momentum in the second half of 2014 underlying the spring
projections are called into question by current data”. The report also
commented that inflation expectations were noticeably below the ECB mandate.
The report also warned that expansionary policy “comes with the danger that
there will be marked excesses and that consolidation and reform efforts of
member states in the monetary union wane.”
·
In currency
markets, geopolitical developments continued to settle, supporting risk
sentiment. GBP failed to increase after opening higher in Asia on the back of
BoE comments, implying GBP/USD remains relatively well offered. EUR/USD was
under pressure after the Bundesbank took a pessimistic tone in its monthly
report and the USD was supported by an improvement in the US August NAHB
housing index.
·
US Treasuries
steadily sold off at the long end last night, retracing part of Friday’s
sharp rally. The 2-year bond yield was unchanged at 0.42% and the 10-year
bond yield rose 4 bps to 2.39%.
·
US equities took
the lead from European equities and gained sharply in early trade. The
S&P 500 increased 0.9% to 1,972, with industrial stocks up 1.5%. The
Nasdaq rose 1.0% to 4,508 while the Dow Jones increased 1.1% to 16,839.
·
Oil prices fell
mildly overnight with an easing in geopolitical tensions. Brent futures fell
0.8% to USD 101.79 per barrel and WTI futures declined 0.2% to USD 96.41 per
barrel.
·
The spot gold
declined 0.2% to USD1,298.4.
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INDICATIVE MAJOR CURRENCIES
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