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Concerns about Fed tightening and ECB tapering hit bonds, the worst may not be over for gold, and oil approaches $50 a barrel. Here are some of the things people in markets are talking about today.
Federal Reserve Bank of Chicago President Charles Evans added to this week's hawkish Federal Reserve comments, saying he expects the central bank to raise interest rates in December. In Europe, a consensus is building on ending the central bank's bond purchase program — when the time comes — by tapering purchases by €10 billion a month. The talk of tightening and tapering has spurred a reversal in government bond prices across the world, with U.S. Treasuries dropping while German 10-year bond yields are at -0.03 percent this morning, up from -0.15 percent last Friday.
Gold was trading 0.2 percent higher at 6:12 a.m. ET this morning after dropping 3.3 percent yesterday, falling below $1,300 an ounce for the first time since June. While one top forecaster says gold may recover its shine on global risks into the end of the year, Deutsche Bank AG Chief Global Strategist Binky Chadha said the precious metal looks to be about 20 to 25 percent overvalued. A 25 percent drop from today's level would take gold below $1,000 an ounce for the first time since 2009. Meanwhile, a formerly super-hot gold mining ETF is getting destroyed.
Oil eyes $50
A barrel of West Texas Intermediate for November delivery was trading at $49.50 at 6:11 a.m. ET following data from the American Petroleum Institute showing U.S. crude inventory plunged by 7.6 million barrels. Venezuelan Oil Minister Eulogio Del Pino said an agreement to limit production among OPEC and non-OPEC states could add $15 to crude prices.
Overnight, the MSCI Asia Pacific Excluding Japan Index fell 0.3 percent, while Japanese stocks rallied on the weaker yen, with the Topix index gaining 0.5 percent. In Europe, the Stoxx 600 Index was 0.8 percent lower at 6:13 a.m. ET on concerns over potential tightening by the ECB. The U.K.'s FTSE 100 Index declined 0.5 percent, despite the pound dropping as low as $1.2686 in trading this morning. S&P 500 futures were little changed.
It's jobs week in the U.S. and ahead of Friday's big payrolls number there is plenty of data due to whet the appetite. Today we get mortgage applications at 7:00 a.m. ET, followed by ADP figures at 8:15 a.m., and trade balance at 8:30 a.m. After markets open we'll get Markit services and composite PMI for September at 9:45 a.m., with ISM Non-Manufacturing Composite at 10:00 a.m. Also at 10:00 there is Durable Goods and Factory Orders data due.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Now's the time for pound traders to bone up on European politics.
- Alaska's oil reserves may have just grown 80 percent.
- Markets are ignoring a bunch of end-of-year uncertainty.
- Go East! Negative yields spread to Romania.
- The bank that predicted Brexit is avoiding British assets...
- ... While global banks based in the U.K. warn $51 billion and 70,000 jobs at stake.
- The SEC examines if LendingClub ex-CEO withheld a possible conflict on interest from board.