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OVERNIGHT MARKET
UPDATE:
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·
It was a low-key start to the week due to the Columbus Day
holiday in the US and the Sport Day holiday in Japan.
·
US – Chicago Fed President Evans (voting member) stated that he
still thought that "the best choice is middle of 2016" for the Fed to
hike rates in order to provide time for the central bank to have greater
confidence that inflation will return to target. However, he added that the Fed
could commence rate hikes earlier "without probably doing much adverse
effect on my outlook".
·
US – Atlanta Fed President Lockhart reaffirmed his view that
rate hikes were nearing, noting that "the beginning of normalization of
interest rates I think is quite justifiable in the context of continuing
progress of multiple measures of employment".
·
Currency – A relatively quiet session continuing existing trends
– USD weakness and AUD and NZD strength. CAD notably broke trend weakening in
sympathy with oil declines (on the back of increased OPEC
production).
·
Equity – The Euro Stoxx 50 (-0.1%) and FTSE 100 (-0.7%) were
both modestly lower in subdued trading. The S&P 500, Dow Jones and Nasdaq
were up very modestly ahead of a raft of corporate earnings results this week.
For the S&P 500, energy stocks were lower on the sharp drop in the oil
price while utilities
outperformed.
·
Rate – Bond markets generally followed the tone from equity
markets and oil, which were lower on the day. Core euro area sovereign bond
10-year yields fell 3-4 bps. Italian and Spanish sovereign 10-year bond yields
fell a more modest 1-2
bps.
·
Energy – The recovery in crude oil prices faltered as OPEC
production climbed. Oil dropped the most in three weeks after OPEC reported that
its members pumped the most crude in three
years.
·
Precious Metal – Gold prices advanced to the
highest level in seven weeks as Chicago Fed Evans commented that best choice to
hike rates is middle of 2016.
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