News & Views: Friday, October 24
What you need to know for today's trading day.
Stagnating euro zone seeks to persuade Germany to shift (Reuters)
Doctor in New York City Is Sick With Ebola (NYTimes)
Brazil $101 Billion Swaps Position Looms Before Election (Bloomberg)
Iron Ore Glut Spurs Drop in China Output, Goldman Says (Bloomberg)
China Home-Price Drop Spreads as Easing Fails to Halt Slide (Bloomberg)
Some of the enthusiasm that had been injected into the market this week is being tempered overnight with news that a NYC doctor who treated Ebola patients has contracted the disease and is being held in isolation at a hospital in the city. For a change, US stock futures are showing the largest negative risk-adjusted return overnight in equities and were down almost a percent on an absolute basis after the test results were confirmed as positive. I assume that stocks will be very sensitive to headline risk today regarding any developments in this case.
Chinese property prices saw a deepening decline in September. New residential prices saw declines in 69 of 70 cities from the prior month, the worst reading in years, and no regions saw growth. Chinese equities - both the local Shanghai Composite and Hang Seng - were unfazed by the development, however. The renminbi saw some initial weakness, but has since strengthened. The market is clearly expecting that more reserve rate cuts are coming and further easing of mortgage regulations, although the 1yr swap rate is now nearing a five year high.
UK GDP came in exactly as expected for the advance third quarter report (breakdown below in the Data section). They are the first G8 country to do so, and it is a somewhat positive sign to see the report as expected considering the concerns over disinflation and a global slowdown in growth. UK Gilts are bull flattening today, however, but I think this is more due to the strength in US Treasuries rather than a response to any growth concerns, because the Pound is higher versus the Dollar - you would expect to see that going the other way.
- UK GDP QoQ (3Q advance) down to 0.7% vs 0.7% expected, prior 0.9%
- UK GDP YoY down to 3.0% vs 3.0% exp, prior 3.2%
- New Zealand trade balance (Sep) widens to -1350M vs -625M exp, prior -489M
-- Exports up to 3.61B vs 3.50B exp, prior 3.51B
-- Imports up to 4.96B vs 4.20B exp, prior 4.00B
- China leading economic index (Sep) up to 302.6, prior 299.9
- German GfK consumer confidence (Nov) up to 8.5 vs 8.0 exp, prior 8.4
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