Relatively quiet overnight session, with markets trading cautiously.
ASX was up 0.4% in early trade, now negative on the day.
U.S. Futures are flat and European markets look set to open relatively unchanged.
Well, I say inflation...
Japan’s core consumer prices fell at their fastest pace in almost four years in August, dragged mostly by government-sponsored discounts for domestic travel aimed at supporting the battered tourism sector.
Meanwhile, downward pressure on prices is broadening from the hit to demand caused by the coronavirus.
The so-called core-core price index, which excludes food and energy prices and is closely tracked by the central bank as a narrower gauge of inflation, fell 0.1% in August, the first fall since March 2017. In July, the index gained 0.4%.
Analysts see the reopening of businesses after a nationwide shutdown supporting the economy, but firms and consumers remain cautious about the coronavirus outbreak and the pace of recovery may be limited.
The resurgence in coronavirus cases is the biggest threat to the recovering euro zone economy, according to a Reuters poll of economists, who say growth and inflation are more likely to create negative surprises over the coming year than positive ones.
Most economists have remained pessimistic about the bloc’s growth outlook since the pandemic struck, and some have lowered their inflation views even further from last month.
These charts give a good insight into the current lie of the land.
OPEC+ On hold for now, ready to do more
Yep, I made them sound like a central bank.
During the meeting, Saudi Arabia's energy minister Prince Abdulaziz bin Salman cracked down on the OPEC+ compliance laggards and secured commitments from them to compensate for their overproduction.
According to a technical report by the Joint Ministerial Monitoring Committee, countries that exceeded their quotas from May-August have a cumulative 2.375 million b/d of compensation cuts due, which are required to be completed by the end of the year –- an extension of the previous end-September deadline.
The UAE, which has thus far struggled to meet the production quotas, has already signaled that it will ensure compliance through ADNOC, which announced a 25% cut in November term volumes.
Referencing the upward trajectory of the crude oil futures market, Stephen Innes, Chief Global Markets Strategist at AxiCorp said in Sept. 18 note, "[Prior to the OPEC+ meeting], traders had already been nudging prices higher expecting a resolute messaging around quota compliance and compliance catch up where necessary so that global inventories continue to fall. [However during the meeting] OPEC+ over-delivered on both fronts as Prince Abdulaziz pulled no punches but instead came out swinging."
Innes, however, warned that while crude oil has recovered from its recent lows, demand fundamentals remain weak and the short-term trajectory of the market is sensitive to the pace of global economic recovery.
"The bearish builds in [oil] products unequivocally suggest weak demand, pointing to the market's Achilles heel, and could ultimately prove short-term price capper," he said in the note.
"Came out swinging"
If only central bankers were as entertaining as the Saudi oil minister.
Stimulus impasse continues, shutdown to be avoided...
Lawmakers and aides said they were finishing up discussions Thursday on a bill they planned to introduce midday Friday that would keep the government funded likely into mid-December. Democrats had hoped to extend its duration into 2021, but didn’t intend to derail talks over its end date, aides said. The bill is expected to be introduced in the House, but will reflect a bipartisan agreement between both chambers.
“I don’t think anybody wants to be responsible for shutting down the government on the eve of an election in the middle of a pandemic, so it’s a rare outbreak of common sense on both sides,” said Rep. Tom Cole (R., Okla.), a senior member of the House Appropriations Committee.
With no further easing from the Fed (yet), no stimulus bill incoming, unemployment stabilising at high levels, retail sales (consumption) slowing, and the election looming, it doesn't paint a pretty picture for risk over the coming weeks.
The central bank said it will release the results of the new analysis by the end of 2020. The upcoming test marks an unprecedented second stress test in a year for the Fed, which said the “continued uncertainty” from the pandemic made it necessary to keep testing bank resilience.
The next test will include two additional scenarios for banks to pass. One envisions a severe but short-lived economic decline that sees unemployment spike to 12.5% at the end of 2021 but rapidly decline afterward.
The second scenario is less severe but longer-lasting, with unemployment jumping to 11% by the end of 2021 but declining more slowly. Both scenarios also include sizeable economic declines both in the United States and abroad.
Another relatively quiet day on the calendar.
UK retail sales are expected to increase, albeit at a slower pace than last month.
German PPI shouldn't get any pulses racing.
Anything with a JUL on the end will be ignored.
The UofM sentiment indicators this afternoon the only data point of mild interest.
ECB's De Guindos & Schnabel
Fed's Bullard (15:00BST) & Bostic (17:00BST)