Morning Update – 10/08/2017 – by Arjun Lakhanpal

Morning all..  Another late rally after the European close lifted stocks away from the lows in the US and saw the S&P close down just marginally and the NASDAQ just 0.28%. Buying the dip still in fashion it seems and no new news on N. Korea. In Asia we saw the Nikkei close more or less unchanged as USDJPY remained locked at 110.00 but HK was down almost 1%. FX markets a little quieter but safe haven currencies remained strong. NZD was the biggest mover overnight falling 0.8% after the RBNZ kept interest rates unchanged at 1.75%. The fall was sparked after Governor Wheeler commented that the RBNZ remain neutral on rates and does not see the OCR increasing for the foreseeable future. Wheeler also mentioned NZD lower is needed to “increase tradable inflation and help deliver more balanced growth” quoting that FX intervention is always open. In other asset glasses gold hovers at a 2-month high of $1,278.00 climbing 1.3%. Yields on US 10yr sits at 2.245% and oil is unchanged. North Korea dominates the news as well as the markets, overnight secretary of State Rex Tillerson tried to ease the concerns around the geo-political situation stating “Americans should sleep easy at night and have no concerns about this particular rhetoric of the past few days” suggesting that all options are still on the table for North Korea. In contrast Pyongyang continued to add strain saying only “absolute force” can work on someone as “bereft of reason” as President Trump. State media released that North Korea will complete a plan this month for striking Guam; South Korea have promised a “strong response” if Kim Jong Un’s regime carries through on any of its threats. Turning to the Fed, Louis Fed President James Bullard warned that failure to get inflation to the central bank’s 2% goal undermines its credibility and separately, Chicago Fed chief Charles Evans stated it would be “reasonable” to announce the start of balance sheet reduction next month, but cautioned disappointing inflation data may delay rate hikes. Remember we have US PPI today and US CPI tomorrow. Meanwhile this morning we get a look at French, Swedish and Uk Industrial Production, along with UK Trade data and construction output.. Good luck.