S&P futures extended their Wednesday decline, dropping in the overnight session with banking shares in focus ahead of results from JPMorgan and Citigroup. European stocks likewise retreated along with the dollar, while Asian shares were mixed.
In this holiday-shortened week (markets closed for Good Friday), focus turns to several inflation prints in G10 in the week ahead, with US and UK inflation data likely to get the most attention. In addition, there are a few scheduled speaking engagements by Fed officials, including a speech by Fed Chair Yellen on Monday.
S&P futures point to a slightly lower open, while Asian and European stocks are likewise modestly in the red. Trading volumes are muted for most markets on Monday with investors spooked by rising geopolitical tensions in the Middle East and the Korean peninsula. It is also a holiday-shortened week in much of the West.
Just a week ago we warned of China's record glut of Iron Ore (enough to build 13,000 Eiffel Towers), and following warnings from Barclays and RBA of a likely pullback, futures in Dalian sank to lowest since November as steel sags.
"we believe the current C&I slowdown reflects payback from credit facility usage by commodities firms, many of which began drawing upon credit lines in late 2015 as financial conditions tightened and the debt issuance window closed" - Goldman
While Trump seemingly remains the only topic worthy of discussion blanketing the airwaves, as the following chart from Goldman demonstrates, it has been China where policy uncertainty has stealthily exploded in the past three months.
In the latest tightening in China's financial conditions, the China Securities Journal reports that some bank branches in Beijing, Guangzhou and Chongqing have raised mortgage rates for first-home buyers recently.
Bank of England kept its key interest rate at 0.25%, gilt purchase program at GBP435b, corporate-bond plan at GBP10b as it reiterated that it has limited tolerance to above-target CPI, and some Monetary Policy Committee members had “moved closer to those limits.”
European shares rose as Fiat rebounded on hopes concerns about parallel to Volkswagen are overblown, Asian stocks were little as Chinese shares fell to the lowest level of 2017 after poor export data, and U.S. equity-index futures rose ahead of a deluge of bank earnings. The dollar is headed for a weekly loss and gold trades at the highest price in almost two months.
We expect global monetary authorities to protect the dollar as long as they can and we expect them to fail. Stocks and bonds will react violently; stocks and weak credits falling, treasuries prices rising (at first). That failure will lead to hyperinflation – not driven by demand, but rather by central bank money printing. A new global monetary understanding will then emerge.
The Fed's latest Beige Book released Wednesday found seven regional Fed districts reporting economic activity as growing at a modest or moderate pace, a decline from 11 in the last report, with strong dollar headwinds among one of the more frequently cited reasons for the weakness.
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.