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Calm Before The Payrolls Storm

With China markets closed for holiday until the middle of next week, and little in terms of global macro data overnight (the only notable central banker comment overnight came from Mario Draghi who confidently proclaimed that "economic growth is returning" which on its own is bad for risk assets), it was all about the USDJPY which has seen the usual no-volume levitation overnight, dragging both the Nikkei higher with it, and US equity futures, which as of this moment were at session highs, up 7 points. The calm may be broken, though, as soon as two hours from now when the September "most important ever until the next" payrolls report is released.

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RANsquawk October NFP preview

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Asian Equities Tumble On Commodity Fears; US Futures Rebound After India "Unexpectedly" Eases More Than Expected

It was a tale of two markets overnight: Asia first - where all commodity hell broke loose - and then Europe (and the US), where central banks did everything they could to stabilize the already terrible sentiment.

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RANSQUAWK WEEK AHEAD VIDEO: 28th September 2015 - Friday sees the latest nonfarm payroll report from the US, with surveyed expectations for the reading at 200k while this week also sees the advance reading of Eurozone & German CPI for September


· Friday sees the latest nonfarm payroll report from the US, with surveyed expectations for the reading at 200k

· This week sees the advance reading of Eurozone and German CPI for September, which may see added attention given recent suggestions the ECB may expand QE

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US Futures Resume Tumble, Commodities Slide As Chinese "Hard-Landing" Fears Take Center Stage

It was all about China once again, where following a report of a historic layoff in which China's second biggest coal producer Longmay Group fired an unprecedented 100,000 or 40% of its workforce, overnight we got the latest industrial profits figure which plunging -8.8% Y/Y was the biggest drop since at least 2011, and which the National Bureau of Statistics attributed to "exchange rate losses, weak stock markets, falling industrial goods prices as well as a bigger rise in costs than increases in revenue." In not so many words: a "hard-landing."

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Futures Plunge On Renewed Growth, Central Bank Fears; Volkswagen Shares Crash As Default Risk Surges

While Asian trading overnight started off on the right foot, chasing US momentum higher, things rapidly shifted once Europe opened as attention moved back to global growth fears, global central banks losing credibility, as well as miners and the ongoing Volkswagen fiasco.

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RANsquawk Week Ahead 21st September: Comments from Fed speakers could see focus this week given dovish rhetoric at last week’s rate decision, with Yellen, Lockhart, Bullard and George all scheduled to speak

· Comments from Fed speakers could see additional focus this week given the dovish rhetoric seen at last week’s press conference, with Yellen, Lockhart, Bullard and George all scheduled to speak.

· Outside of America, Europe sees the German IFO survey release, while markets will also look towards the release of China’s Caixin PMI.

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The Fed's Long Awaited Decision Day Arrives, And Chinese Stocks Wipe Out In The Last 15 Minutes

The long awaited day is finally here by which we, of course, mean the day when nobody has any idea what the Fed will do, the Fed included. Putting today in perspective, there have been just about 700 rate cuts globally in the 3,367 days since the last Fed rate hike on June 29, 2006, while central banks have bought $15 trillion in assets, and vast portions of the world are now in negative interest rate territory.

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RANsquawk PREVIEW: FOMC Monetary Policy Meeting Decisions & Projections - 17th September 2015

  • Markets await one of the most hyped rate decision in several years
  • Most expect the Fed to keep the Fed Fund Rate on hold at 0.00-0.25% while signalling a possible rate hike by the end of the year, however there is a substantial outside bet (~30%) that the Fed will hike rates by 15-25bps


September’s FOMC monetary policy decision has been one of the most hyped rate decisions in recent years, with expectations shifting in the past few months from a possible hike to the Fed Funds Rate (FFR) to the most recent consensus that the bank will leave rates unchanged this month. There remains an substantial but outside bet (markets pricing in ~30% probability of a hike) that the Fed could raise rates this month, however rhetoric from the central bank over the past month suggests policy makers remain undecided, and given the Fed’s commitment to communication, many suggest Fed Chair Yellen would have prepared the market much more if action was likely to be taken on Thursday.

Many analysts note that financial markets are not ready for the first rate hike yet, the Fed will not lose credibility if they do not move, and one large consideration for the doves on the committee is that the full impact of “Black Monday” has yet to be fully seen and global growth uncertainties remain after a period of market volatility. However, hawks on the panel will likely support their argument for a rate hike by pointing to the fact that the Fed cannot wait for overwhelming evidence before hiking as this would be too late. One other point members are likely to pick-up on is that the labour market can no longer be used as an excuse to delay this month given its relative strength, however inflation continues to languish as indicated by Wednesday’s fall in CPI due to the slide in gasoline prices.

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Futures Fade Early Euphoria After Chinese Stocks Resume Slide

While any moves in the US stock market ahead of Thursday are largely irrelevant, as only Yellen's statement in 4 days will unleash epic algo buying or short covering (yes, according to JPM the Fed statement is bullish no matter what), it is what happened in China that is concerning, because while we had expected Chinese stocks to go nowhere in particular now that index future trading volumes have plunged by 99% or perhaps rise on hopes of even more easing after the latest terrible economic data, the Shanghai Composite dropped 2.7%, but it was the retail darling Shenzhen Composite which tumbled 6.7% - its worst selloff since August 25, while China's Nasdaq, the ChiNext crashed -7.5%.

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Futures Surge Overnight As Deteriorating Economic Data Unleashes Blur Of Central Bank Interventions And QE Rumors

It has become virtually impossible to differentiate between actual central bank intervention, hopes of central bank intervention, and how the two interplay on what was once the "market" but is now merely the place where money printers duke it out every day in some pretense of price discovery set by those who literally print money.

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RANSQUAWK BoE Preview: The minutes release is expected to once again show an 8-1 vote split in favour of keeping rates on hold

• All surveyed analysts expect the Bank of England to keep monetary policy unchanged, with the bank rate at 0.5% and the Asset Purchase Facility at GBP 375bln
• Headline UK CPI printed at 0.1% for July, still well below the BoE’s mandated 2% target
• The accompanying minutes release is expected to once again show an 8-1 vote split in favour of keeping rates on hold

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