Close

Markets Quiet Ahead of FOMC Minutes

October 8, 2014 7:32 AM EDT

Market strategists at Nomura, including Charlotte Dendy, note a quiet morning ahead of today's FOMC minutes. That said, the strategists notes the market has now moved into very choppy waters.

"While the S&P future is holding steady this morning around the 1930 level, European equity markets are still playing catch-up to the late moves in the US yesterday, with major bourses down around 0.5%," Nomura said. "Generally, across asset classes it feels like the market is in one of its pain-hunting modes, 2yr US yields testing the 50bp level, while out at the long 30yr yields have pushed below their August lows. Our US economists continue to see value in 2yr and 3yr yields as set out in the Q4 outlook published on Friday."

They note one issue that is driving most moves in the market is the strength of the dollar and the concomitant weakness of commodity prices. "As US yields have rallied in the past few days, the dollar has fallen a fraction, but today it is rallying across the board. Is it possible that somehow we have moved from the 'world is good = US hikes = strong dollar' to the 'world is bad = flight to safety = strong dollar' without the intervening period of dollar weakness in between?"

Overnight headlines of interest included:

  • France: The Bank of France September business sentiment survey fell to 96 from 97 in August.
  • Spain: Industrial output SA y-o-y fell 0.6% from 0.8% in July (Consensus: 0.9%).
  • Spain: House transactions fell 1.1% y-o-y in August (Previous: 10.7%).
  • UK: Halifax house prices rose 0.6% m-o-m, more than expectations (Previous: 0.1%, Consensus: 0.2%).
  • Switzerland: September‟s unemployment rate remained at 3.2%

For the day ahead, the key will be the FOMC minutes from the September 16-17 meeting, which are due at 2PM ET. "The Federal Open Market Committee (FOMC) moved again to reduce the pace of its asset purchases by $10bn at its September meeting. The Committee made no substantive changes to its statement, but revised its forecasts notably. The minutes should provide additional insight behind the Committee's decision to leave its forward guidance unchanged and when it thinks the most appropriate time to reformulate forward guidance might be, especially because of the imminent end of asset purchases. Discussions on the Committee's view on future rates will also be noteworthy."



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Economic Data, Fed, Market Check

Related Entities

FOMC Minutes, Federal Open Market Committee, Standard & Poor's, Nomura