A review of the week past and the week ahead

Charts (3)

 

What mattered last week:

  • The S&P500 fell -5.42% as pre-election stimulus talks ended, as well as nerves ahead of the U.S. election and fears of a contested result.
  • As well as surging coronavirus cases, resulting in a return to lockdowns in France, Germany, and the U.K.
  • Partially offset by good economic data as both U.S and Eurozone September GDP data recovered more than anticipated.
  • Volatility, as measured by the VIX index, closed higher for a third straight week at 38.0.
  • U.S. 10-year yields closed 5bp higher, near 0.88%.
  • Gold closed -1.20% lower near $1878.
  • Crude oil closed -10.00% lower at $35.79/bbl.
  • The ASX200 closed -3.88% lower at 5927.6.
  • In FX, the AUDUSD closed lower near .7030, as the U.S. dollar found a flight to safety bid.

For the week ahead, the key events are:

Australia: Building approvals, home loans (Monday), RBA interest rate decision (Tuesday), balance of trade (Thursday), RBA Statement of Monetary Policy (Friday).

  • RBA Interest rate decision(Tuesday): The RBA is expected to cut the cash rate from 0.25% to 0.1%, cut the 3-year bond yield target from 0.25% to 0.1% and cut the term funding facility rate from 0.25% to 0.1%. Its also expected to make changes to its QE program. Full details can be read here.

New Zealand: Building permits (Monday), global dairy auction (Tuesday), employment (Wednesday), ANZ business confidence (Thursday), business inflation expectations (Friday).

China: Caixin manufacturing PMI (Monday), Caixin services and composite PMI (Wednesday), balance of trade, and foreign exchange reserves (Saturday).

Japan: Bank of Japan meeting minutes (Wednesday).

U.S: ISM (Monday) U.S. Presidential election (Tuesday/Wednesday), FOMC meeting (Thursday), employment  (Friday)

  • Employment (Friday):  The market is expecting to see a 700k gain in payrolls with the unemployment rate falling to 7.7% in October from 7.9% last month.

September quarter earnings season continues with reports from companies including PYPL, QCOM, and SQ.

Canada: Markit manufacturing PMI (Monday), balance of trade (Wednesday), employment (Friday).

Euro Area: German factory orders and construction as well as EA retail sales (Thursday), German industrial production (Friday).

UK: Bank of England interest rate meeting (Thursday).  

  • Bank of England interest rate meeting (Thursday): The MPC is expected to announce another round of QE adding a further £100bn in Gilt purchases to take its total purchases to £845bn.

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