In this holiday-shortened week, attention will be on the US FOMC minutes, housing data and consumer confidence. There will be GDP, PMI and inflation releases across the Euro Area as well as the latest Greek Eurogroup meeting. Look for GDP and public finances data in the UK.
Given the multiplying and shrilling-squawking omens of hubris and overconfidence in today's hyper-extended markets -- a murder of complacencies, if you will -- we conclude we've reached the point in this storyline where the suspense has risen to its zenith, and the real violence then begins.
European bonds fell and stocks rose led by banks and retailers as surging inflation data prompted investors to switch into reflationary assets even as speculation about ECB tapering has returned. Asian stocks and US equity futures declined. The Yen and gold advanced after Trump’s firing of the U.S. acting attorney general added to concern over the unpredictability of decisions in the new administration.
Markets will again zero in on the U.S. this week, and not just because of Donald Trump. The Federal Reserve meeting and nonfarm payrolls may set a clear direction for dollar and yields for the next few months. Other key releases include ISM, ADP, housing data, personal income & spending, vehicle sales and core PCE.
The key economic releases this week are durable goods and GDP on Friday. On the political front, the focus will be is on the first actions of the Trump administration including moves on TPP and NAFTA. There are no scheduled Fed speeches this week.
US home prices have never been higher according to October's Case-Shiller data - surpassing July 2006's peak. The 5.1% YoY rise was slightly better than expected, but, with mortgage applications at Lehman lows and mortgage rates spiking to near 3-year highs since this data, the question is - what happens next?
Most world markets have reopened following the holiday weekend, but trading volumes remain significantly muted. Asian and European shares advance modestly amid low volumes with U.K. and Ireland closed; S&P futures are little changed while the dollar rose and oil extended its longest winning streak in four months.
Almost exactly ten years after the last housing bubble burst, unleashing a dramatic crash in US real estate prices today Case Shiller reported that as of September, its Index covering all nine U.S. census divisions, surpassed the peak set in July 2006 as the housing boom topped out, and in doing so the average home price has now climbed back above the record reached more than a decade ago.
European stocks were little changed and oil fell as investors assessed declining prospects for an OPEC deal and risks from Italy’s referendum. Asian stocks declined, while S&P futures pointed to a fractionally higher open, erasing 3 points from yesterday's drop.
The key economic releases this week are consumer confidence on Tuesday, ISM manufacturing on Thursday, and the employment report on Friday. There are a few scheduled speaking engagements from Fed officials this week. The Beige Book for the December FOMC period will be released on Wednesday.
European shares dipped and U.S. equity-index futures (-0.3%) pointed to a lower open as traders questioned the stability of the Italian banking sector ahead of next weekend's referendum as well as the longevity of the Trumpflation rally, pressuring the dollar. "It's a bit of a pull back in the dollar," said Societe Generale strategist Alvin Tan. "The fall in oil is pushing back U.S. bond yields and that is leading the consolidation in the dollar.. there is more scepticism about an (OPEC) output cut now."