In a lighter week in terms of major macro news flow compared to the previous, focus will be on the BoJ minutes due on Tuesday. The release will look into whether the central bank were close to expanding QQE and whether the meeting on the 30th October is still said to be a potential date for when this could occur, given that the Fed have delayed their rate hike . Goldman Sachs have stated that their base case scenario is for the BoJ to expand their easing program at the later October meeting, citing the downward trend in expected inflation rates alongside the September Tankan survey confirming evidence of a slowdown in manufacturing.
Furthermore, multiple Fed speakers are expected, including: Brainard, Evans, Lockhart and Dudley. Participants will watch commentary from the Fed members closely following the release of the more dovish minutes from last week, with emphasis still very much on whether the Fed will hike rates this year. In terms of key data out of the US, the advance reading for Retail Sales (Exp. 0.1%, Prev. 0.2%) on Wednesday will be key for the Fed’s data dependent outlook. At the FOMC minutes, one of the main reasons Fed officials held off on raising short-term interest rates at their September policy meeting was because of worries that inflation could remain stuck at exceptionally low levels. As such, next week’s CPI and PPI reports may take greater precedence.
In terms of equity news, investment banks will be in focus across the US with the likes of JPMorgan, Goldman Sachs, Wells Fargo, Citigroup and Bank of America all due to report their earnings. Focus will be on whether the global slowdown has had any impact on their results, restructuring initiatives and whether any firm will disclose additional costs similar to those of Deutsche Bank last week. Furthermore, AB Inbev and SABMiller will garner attention at the beginning of the week as AB Inbev have until Wednesday to submit an offer for the Co. or walk away from the deal for a minimum of 6 months unless SAB Miller asks the takeover panel to extend discussions. Sources note that AB InBev is likely to make an improved offer of GBP 43-44/shr before the 1700BST bid deadline. Regarding these talks, it is also worth noting that key SABMiller shareholders, Aberdeen Asset Management and Kulczyk Investments SA stated that they agreed with the rejection of AB Inbev’s offer on Wednesday.