Morning Update – 10/10/2017 – by Arjun Lakhanpal

Morning all.. The US Bond markets were closed yesterday but Wall St was open and it closed down in a quiet session with the S&P down 0.18% after opening in the green. However the Nikkei put in a solid performance, up 0.59% but USDJPY hardly moved as the dollar remained in a tight range. AUD was the out-performer after rallying off Friday’s lows in the US as Australian Sep NAB Biz Confidence came in at 7 vs 5 prev; Biz Conditions: 14 vs 15 prev. Also it may have had a boost from the fact China Media suggest China are to alter GDP calculation, boosting Q3 reading; China will add expenditure on research into GDP as fixed asset investment. China Stats Bureau: China has no problems meeting 2017 GDP growth target of around 6.5%, may beat target. GBP was a little higher again and testing yesterday’s highs. UK Sep BRC Retail Sales: +1.9% y/y vs +1.3% prev; fastest pace of growth so far this year (apart from Easter) BRC “spending is still being focused on essential items but consumers are shying away from big ticket items”. PM May got a boost as Telegraph/ORB poll: 57% of voters want PM May to stay at least  until after Brexit. EUR also starting to move higher as focus shifts from the Catalan issue to the ECB as ECB’s Lautenschlaeger (17:01bst): should start reducing bond purchases next year; should be done gradually until no longer purchasing additional bonds; even if we phased out net purchases of bonds completely some monetary accommodation would remain in place due to reinvestments, so total volume of bonds would initially remain constant; time has come to put unconventional tools back in box; low rates justified, have side effects; important we move towards exit, step by step, but steadily in a clear direction; bond purchases will come to end, while rates remain low, well past horizon of net asset purchases; still need to decide on time frame; inflation picked up, not as fast as we would have expected; all factors holding down inflation seem to be temporary. Data this morning sees French and UK Industrial Production and the UK Trade balance and construction output.. Good luck.