Morning Update – 09/10/2017 – by Arjun Lakhanpal
October 9, 2017Morning all.. Wall St closed around unchanged after weak Jobs data but a strong spike in wages which saw US yields and the dollar rally strongly but fears over N. Korea surfaced again and reversed a lot of the days moves.. There is talk that N.K have a missile capability that could reach US shores and a test is due soon. However, the Nikkei managed to close up 0.3% in a quiet Asian session with no fireworks. Trump seems to be suggesting that talks are pointless and that he has little choice but to take action if N.K keep building nuclear capabilities. He said: “Presidents and their administrations have been talking to North Korea for 25 years, agreements made and massive amounts of money paid…… hasn’t worked, agreements violated before the ink was dry, makings fools of U.S. negotiators. Sorry, but only one thing will work!”. This kept risk off to some degree and the dollar remained rather soft overnight with safe haven currencies like JPY and CHF holding gains. But the data from the US Friday does suggest a better chance of a hike this year which is going to have to be balanced against the geo-political risks. Fed’s Rosengren: reiterates support for continued gradual interest rate hikes; Fed must respond to “very tight” labour markets or risk hurting recovery; expects labour markets to tighten further; inflation expectations are “well anchored”. In the UK, BoE’s Cunliffe (Mail on Sunday): hopes a new requirements for lenders to hold more capital would dampen signs of a “bit of exuberance” in credit card and personal lending to British consumers; banks are being over-optimistic in estimating the likely losses from credit card and personal loan debt; are confusing good economic conditions with the credit quality of the actual borrowers. On the data front; China Sept Caixin/Markit Services PMI falls: 50.6 vs 52.7 prev; 21m low; Composite: 51.4 vs 52.4 prev.. No data of note today but we do hear from Draghi this morning.. Good luck.
