Bank of England

Futures, Global Stocks Rise As Oil, USDJPY Drops: All Eyes On The Jobs Report

With all eyes on today's jobs report, where consensus expects a 180K payrolls gain, European, Asian stocks and S&P futures all rise amid a surge in government debt as markets digest the BOE's "kitchen sink" easing for a second day. But please don't overthink it. In deja vu fashion, Bloomberg summarizes the action simply as "stocks rose around the world on speculation central bank stimulus measures will support the global economy." We've heard that just a few times before.

Why Wall Street Loved What The Bank of England Announced Today

Following a handful of underwhelming monetary announcements by the likes of the ECB, BOJ and RBA, today the BOE's Mark Carney unveiled his own version of Draghi's infamous "whatever it takes" gambit, unleashing a kitchen sink of options that went well beyond what Wall Street expected, even quasi-copying Draghi's phrasing, saying the central bank will take "whatever action is necessary" to ensure the UK economy remains strong.

Bank Of England Stock Bounce Fizzles, Bonds & Bullion Bid

"Get back to work Mr. Carney" - it appears the yuuge over-deliver from The Bank of England governor is just not enough to keep the dream alive in equity market land as S&P gives up its QE bounce gains as bonds and bullion remain well bid (amid cable's weakness)...

BOE Cuts By 25 bps To Record Low 0.25%, Boosts QE By £60 BN Including Corporate Bonds; Gilt Yields Crash

As expected, the Bank of England unanimously cut rates by 25 bps to a record low 0.25%. However in a somewhat surprising move, the BOE also expand its QE by £60 billiion to £435 billion in a 6-3 vote, of which up to £10 billion will be in the form of corporate bond purchases, as we previewed last night. Overall a very dovish decision, with Mark Carney providing more monetary stimulus than many had expected, sending sterling plunging and the FTSE100 surging.

Frontrunning: August 4

  • Bank of England cuts rates for first time since 2009, restarts bond purchases (Reuters)
  • Obama administration denies Iran cash payment was a ransom (Reuters)
  • Mike Pence Endorses Paul Ryan After Donald Trump’s Refusal (WSJ)
  • In slap at Trump, some wealthy Republicans campaign for Clinton (Reuters)
  • Clinton leads Trump by 17 points in NH (The Hill)

S&P Futures Flat As Europe, Asia Lifted By Banks, Yen; All Eyes On The Bank Of England

In a mostly quiet session, European and Asian stocks rose, pushed higher by financial stocks and the USDJPY which initially dipped on some hawkish comments by BOJ deputy governor Iwata, only to rebound later in the session, lifting the Nikkei 1.1%, while the Stoxx 600 rose 0.4% led higher by the banking sector. S&P futures are unchnaged after yesterday's last hour ramp. The key event is the BOE decision due in half an hour.

Full BOE Preview, And A Look At What UK Corporate Bond QE Will Look Like

  • Bank of England are widely expected to cut rates to 0.25% with a 25bps rate reduction fully priced in OIS markets.
  • The central bank is also touted to expected to announce further stimulus measures including the potential restart of its QE programme, the LFP Scheme, or corporate QE.
  • 2017 GDP growth forecast is likely to see a significant downgrade amid early signs of a deterioration in the UK economy, while GBP depreciation is likely to support 2017 Inflation forecasts.

Frontrunning: August 3

  • European bank rebound not enough to save world stocks from further losses (Reuters)
  • Republican rift widens as Trump declines to endorse Ryan, McCain (Reuters)
  • New Rough Patch for Trump Campaign Roils Republicans as Defections Grow (WSJ)
  • Obama says Trump unfit to be president (FT)
  • World’s Largest Oil Hedge Set to Make Billions for Mexican State (BBG)

World Stocks Drop For Third Day On Growing Concerns About Central Bank Policy, Tumbling Oil

After 7 consecutive drops in the Dow Jones, the Industrial average is set for an 8th decline with US equity futures modestly lower in the premarket as risk-averse sentiment persists overnight. Oil’s continued slide and recent plunge into a bear market, despite some stabilization this morning just south of $40, has finally rekindled global growth concerns, and is keeping a lid on bullishness. European stocks are little changed, while Asian stocks and S&P futures fall.

Global Shares Slide As Japan Stimulus Disappoints, RBA Underwhelems, Italy Bank Fears Return

European stocks slid to a two-week low amid mixed earnings, as bank stocks extended yesterday’s decline as fears that Italy is not "fixed" have reemerged, not helped by an adverse market reaction to a disappointing Japanese fiscal stimulus announcement, while the AUD first dropped but then jumped after the RBA's priced in rate cut was announced, seen as underwhelming.

Preview Of Key Events In The Coming Week

After last week's central bank and GDP fireworks, we have another busy week on deck culminating with Friday's jobs report, the 100% priced in BOE rate cut, as well as a possible easing by the RBA.Here is the full breakdown.

Frontrunning: August 1

  • Global stocks hit highest in a year but banks take shine off Europe (Reuters)
  • Fed’s Dudley Warns It Is Premature to Rule Out an Interest-Rate Increase This Year (WSJ)
  • Fed’s Kaplan Says September ‘On the Table’ If Data Support (BBG)
  • Europe's stress tests fail to ease investors' bank sector worries (Reuters)
  • Trump’s Attacks on Khan Family Roil Race But May Not Alter It (BBG)