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It's a huge week for monetary policy, an OPEC meeting might lead to another OPEC meeting, and equity markets are rising. Here are some of the things people in markets are talking about today.
Central bank week
It's set to be a huge week for monetary policy with both the Federal Reserve and the Bank of Japan due to meet. With expectations for an interest rate hike from the FOMC on Wednesday remaining low, investors see the Bank of Japan's committee meeting, billed as a comprehensive review of its unconventional monetary policies, as the announcement most likely to drive markets mid-week.
A barrel of West Texas Intermediate for October delivery remains below $44 this morning, trading at $43.69 at 5:58 a.m. ET after clashes in Libya delayed the first crude shipment from the country's Ras Lanuf export terminal since 2014. Venezuelan President Nicolas Maduro said that OPEC and non-OPEC countries are close to an agreement to stabilize markets ahead of an informal meeting in Algiers next week. The uncertainty ahead of that meeting has seen oil investors head for the sidelines, cutting wagers on both falling and rising crude prices.
The overnight interbank yuan rate surged 15.7 percentage points to 23.7 percent in Hong Kong amid speculation that China's central bank is intervening to defend the 6.7-to-the-dollar level for the yuan. There were more signs of froth in the Chinese property market as home prices rose the most in more than six years last month, in spite of the introduction of lending curbs. Meanwhile, the appetite for China's wealthy to diversify away from yuan investments has seen them snapping up capital-boosting bonds sold by European banks.
With Japanese markets closed, the MSCI Asia Pacific Excluding Japan Index gained 1.2 percent overnight, boosted by the bounce in oil and the return of China and Hong Kong from holidays. In Europe, the Stoxx 600 Index was 0.9 percent higher at 6:15 a.m. ET, with Deutsche Bank AG shares struggling again. S&P 500 futures gained 0.4 percent.
The latest Bank for International Settlements quarterly report has a raft of data on the global economy, and also contains some warnings for investors -not least that the post-Brexit recovery in markets could be masking underlying risks. The bank also highlighted the growth in cross-border claims in the aftermath of the start of the ECB's asset purchase facility in early 2015, showing how policies can have unintended spillovers. There was also a warning for China, with one indicator of banking stress standing at its highest level since 1995.
What we've been reading
This is what's caught our eye over the weekend.
- No nation has the will or the way to be the locomotive for global growth.
- Big oil was never that big a money-maker, according to Goldman Sachs.
- Hedge funds are dumping gold at the fastest pace since May.
- Tim Duy on what might give the Fed's hawks more room to fly.
- Stiglitz gives Trump an 'F' on economics.
- The biggest winner from the U.K. heatwave was French.
- Shadow lenders step in for banks facing U.S. property warnings.
- How drug cartels operate like Silicon Valley start-ups.
- Odd Lots podcast: Space robots are helping hedge funds invest.
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