SocGen

Key Events In The Coming Week: Fed Minutes, Retail Sales And, Of Course, Politics

In what should be a relatively quiet, mid-summer week if only on the global economic schedule even as geopolitical tensions continue to set the general risk tone on any given day, the focus over the next few days will be on US retail sales on Tuesday and Industria Production on Thursday, as well as on monetary meeting minutes from the Fed and the ECB.

Futures Flat As Payrolls Loom, Dollar Slide Continues

It took stocks only a few minute to "price in" the latest political shock out of Washington, with the Emini trading 0.07% higher this morning on news that Mueller now has a grand jury, while European and Asian shares are little changed as investors await the looming July jobs report.

Credit Investors Are Suddenly Extremely Worried About Central Banks

The latest credit investor survey by Bank of America shows a marked change in the Wall of Worry: "Quantitative Failure" by central banks has emerged as investors’ top concern (23%), up materially from June’s reading (6%). Investors say that a backdrop of the ECB ending QE next year, while inflation remains sub-par, "has the potential to rattle the market’s confidence."

Tech Stumble Drags Global Markets Lower; All Eyes On The BOE

E-mini futures are fractionally lower this morning (0.08%) after Apple's surge helped the DJIA climb above 22,000 for the first time on Wednesday; Global shares declined for the first time in 4 days pressured by tech stocks: Asian shares fell, while Europe pared opening losses to trade unchanged.

SocGen: "Low Vol Can Misprice High Yield By Up To 30%"

"High confidence as to what an asset is worth can lead to underestimating the potential downside risks, which happens almost mechanically in high yield debt markets where asset volatility informs part of the pricing model. The implication is that high yield credit could be 30%+ mispriced as and when volatility moves back to average."

FOMC Preview: Just 2 Things To Watch For In Today's Fed Statement

With the market pricing in 0% chance of a July rate hike, and with no Yellen press conference to follow, there are just two things to watch for in today's FOMC statement: (1) any hints that Fed balance sheet reduction will be announced in September and (2) adjustments to the language discussing the recent disappointment in the rate of inflation (after 4 consecutive CPI misses).

"ECB Or Not To Be": A Preview Of What Mario Draghi Will Say

Questions on possible exit scenarios will dominate the press conference. While acknowledging the strength of the economy, Draghi is likely to counter any ideas of an imminent and rapid path towards ending QE, instead urging patience with the still-subdued inflation outlook.