Morning Update – 16/10/2017 – by Arjun Lakhanpal

October 16, 2017 by

Morning all.. Wall St had yet another close in the green, albeit small with the S&P closing up 0.09% but we never seem to see any losses of any note these days. The discussion was on whether the data Friday was hurricane impacted or not so confusion reigned. In Asia however we saw more Nikkei strength and this seems to be out-performing with a close up 0.51% on an impressive run in the last few weeks. US yields were a top topic Friday as they closed below the 200 day moving average at 2.318% and traded below support at 2.28% for a while. There is a danger that we see further losses and this would suggest a lower USD. Fed’s Yellen: US economy remains strong; strength of the labour market calls for continued, gradual rate hikes despite subdued inflation; will be paying close attention to inflation data in the months ahead, best guess is that soft readings will not persist and will move higher next year; repeats there is uncertainty of the path of inflation.. Fed’s Rosengren: Dec FOMC a reasonable time to hike again; 3-4 hikes next year will prob be appropriate.. BoE’s Carney: asked if BoE should hike in Nov says UK running out of spare capacity, tolerance for over-target inflation; sticks to language that hike likely to be appropriate in coming months, won’t be more specific.. ECB’s Draghi: underlying infl has ticked up but no convincing sign of moving upward; confident that wages and infl will gradually rise in self-sustaining manner, but together with confidence, ECB should be patient and persistent with mon pol as it is going to take time; wage growth is weak as slack in labour mkt remains sizeable. FX markets were constrained in tight ranges and USDJPY failed to hold above 112.00. Cable traded above 133.00. This morning we get very little data with EU Trade balance. Good luck.