Hello everyone, the markets are starting to show signs of nervousness as we move into the fourth quarter. From here it will get most interesting. Get my take on the markets below in this week’s round-up.
Weekly Sound Bites:
• Markets finished mostly lower for the week as worries that the Federal Reserve’s monetary policy was becoming less effective in supporting the recovery…
• The Fed’s two-day policy meeting, which concluded Wednesday, seemed to weigh on sentiment and may have drained the week’s gains. The post-meeting statement and economic projections revealed that policymakers expect official short-term rates to remain near 0% through 2023, while they tempered their expectations for the size of the economic contraction in 2020 from 6.5% to 3.7%…
• The week’s economic data came in mixed. Core retail sales (which exclude purchases at gas stations, auto dealers, building supply stores, and food services suppliers) fell 0.1% in August, while July’s robust gain was revised lower (to 0.9% from 1.4%)—offering evidence to some that the expiration of extended unemployment benefits was threatening the recovery. Weekly continuing and initial jobless claims hit new pandemic lows but remained elevated, at 12.6 million and 860,000, respectively. Overall housing starts in August missed expectations, but starts of single-family homes remained robust, and building permit data were encouraging…
• The Bank of England (BoE) left its key policy measures unchanged, as expected. However, monetary policymakers indicated that the central bank was ready to take further action if needed, highlighting the risks posed to the stronger-than-expected economic recovery by a resurgence in coronavirus cases, the ending of the government’s job support program, and a chaotic end to the Brexit transition period. The BoE also said it would “begin structured engagement on the operational considerations” of negative interest rates with the Prudential Regulation Authority.
• As was widely expected, Yoshihide Suga was voted in as Japan’s prime minister by both houses of parliament on Wednesday, September 16. He replaces Shinzo Abe, who is leaving his post due to illness. Suga, who is 71 years old, will fill the remainder of Abe’s term, until September 2021… The new prime minister is widely expected to apply pressure on the Bank of Japan (BoJ) to be more responsive to employment conditions…
• A trio of economic readings offered more evidence of a strong recovery unfolding in China, the first country to successfully control the coronavirus. Retail sales rose 0.5% in August from a year ago, the first year-over-year growth since the pandemic began. Industrial production, seen as the best proxy for gross domestic product, rose a better-than-expected 5.6% in August from a year earlier. Fixed-asset investment in the first eight months of 2020 declined slightly from a year ago, narrowing the 1.6% decline from January to July and in line with forecasts… On Wednesday, the Organization for Economic Cooperation and Development (OECD) raised its 2020 growth outlook for China to 1.8% from a 3.7% contraction it projected in June, crediting the country’s rapid control of the coronavirus. China is the only country expected to see positive economic growth this year, while all G-20 countries will have suffered recession… However, trade tensions with the U.S. are expected to weigh on investor sentiment toward China in the coming months. Two-way capital flows between the U.S. and China sank to a nine-year low in the first half of 2020 as bilateral relations worsened and the coronavirus curbed investment in both countries…
Weekly Round-Up;
Don’t Be A Rat Brain Trader — Be The Red Stripe Zebra !!
Trade Smart !
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