Both overnight and early morning it’s been a quiet two sessions of trading in the markets. And looking at the diary of upcoming events it’s difficult to imagine if we’re going to see a change to the doldrums we’re currently witnessing. We receive the publication regarding building permits for the USA, the Case Shiller house price index, expected to show that USA house price have risen by 13% year on year. The Conference Board consumer sentiment index and the Richmond Fed manufacturing index are both printed, neither expected to significantly affect market sentiment. The CS house price index could fall from the currently anticipated 13% given that many of the various house price and housing activity gauges have come up short of expectations recently.
In the UK the main event of the day appears to be the UK’s BoE governor Mark Carney being thrust into the spotlight once again, this time to deliver an inflation report at the aptly named inflation report hearings. The mainstream media in the UK does appear to be slightly obsessed by their new governor; hardly a week goes by without another photo opportunity and grilling taking place. This latest presentation is not ranked as high impact more low impact, therefore it’s questionable as to the reason why such a media circus scrum is presenting itself to listen to the points made at the hearing. With inflation in the UK seemingly under control at circa 3% RPI and 2% CPI this latest hearing does appear to be overkill.
Market snapshot at 10:00 am UK time
Equities across the Asia-Pacific region slipped marginally lower early Tuesday morning after US markets retreated from their record-highs reached early on Monday. Oil prices found some stability after an initial sell off following the weekend deal to curb Iran’s nuclear programme.
Minutes from the Bank of Japan’s last meeting published in the overnight session reveal tensions over how to frame policy in order meet its 2 per cent inflation target, the chief goal of the central bank’s aggressive easing programme it initiated in April. The Oct 31st minutes reveal pessimism illustrating that some BOJ members believe the 2015 inflation target might be too ambitious.
The CSI closed down 0.05%, the Hang Seng closed down 0.01%, and the Nikkei closed down 0.67% on the day. Euro STOXX is down 0.07%, CAC down 0.11%, DAX up 0.02%, and the UK FTSE down 0.17%. Looking towards the New York open the DJIA equity index future is up 0.04%, the SPX up 0.06% and the NASDAQ up 0.07%.
Forex focus
The yen rose 0.2 percent to 101.48 per dollar early in London after depreciating to 101.92 yesterday, the weakest level since May 29th. Japan’s currency fell 0.2 percent to 137.67 per euro. The euro rose 0.3 percent to $1.3561 after declining 0.3 percent yesterday. The yen strengthened for the first time in four days versus the dollar after minutes of the Bank of Japan’s October meeting showed some officials said they saw risks to the outlook for the economy.
The yen has tumbled 13 percent this year, the worst performer of 10 developed-nation currencies tracked by the Bloomberg Correlation-Weighted Indices. The euro has advanced 6.9 percent and the dollar strengthened 3.7 percent.
The Aussie advanced 0.1 percent to 91.69 U.S. cents after sliding 2.9 percent in the previous four days. Australia’s dollar gained after Reserve Bank Deputy Governor Philip Lowe said the bar for intervention was high.
Commodities
WTI for January delivery gained by up to 53 cents to $94.62 a barrel in electronic trading on the New York Mercantile Exchange. It was at $94.48 in Singapore trading time. The contract decreased 75 cents to $94.09 yesterday, the lowest close since Nov. 20th. The volume of all futures traded was about 46 percent below the 100-day average. Prices are up 2.9 percent this year. Brent for January settlement traded at $110.76 a barrel on the London-based ICE Futures Europe exchange, down 24 cents. It was at a premium of $16.28 to WTI futures. The spread was $16.91 yesterday, the widest in more than eight months.
Bonds
The 10-year German bond yield was at 1.72 percent early in London after falling to 1.68 percent on Nov. 19th, the lowest since Nov. 7th. The price of the 2 percent bond due in August 2023 was 102.465. The two-year note yielded 0.13 percent. Benchmark 10-year USA yields were little changed at 2.73 percent early London time. The price of the 2.75 percent security maturing in November 2023 was 100 7/32. Treasury five-year notes were the most expensive since June relative to two- and seven-year securities before the U.S. sells $35 billion of 2018 debt today.
