This Week’s Economic Calendar
19 Oct 2020Key events on the calendar this week are as follows:
• Wednesday 21 October 2020 UK inflation (Sep)
• Friday 23 October 2020 Japan Manufacturing PMI (Oct)
• Friday 23 October 2020 Eurozone Composite PMI (Oct)
• Friday 23 October 2020 US Composite PMI (Oct)
Note: PMI stands for Purchasing Managers Index.
US Treasury yields continue to move sideways
19 Oct 2020US Treasury yields have remained rangebound since dropping sharply in March. With the US Federal Reserve now targeting average inflation and expected to keep rates low for longer, long term Treasury yields have remained low even as economic data has shown signs of improvement. 10-year Treasury yields have risen modestly so far in October and currently stand at around 77bps (as of 19 October) compared to 1.91% at the start of the year. Markets are now turning their attention to the next fiscal stimulus injection in the US.
Short and leveraged global exchange traded product (ETP) flows in September
15 Oct 2020The monthly short and leveraged global flows report is compiled by WisdomTree using a proprietary database which covers and categorises every S&L ETP globally in terms of the underlying investment and leverage factors. This enables readers to form a holistic view of global flows in short and leveraged ETPs.
In September, investors took bullish positions in USA equities during a month when equity markets pulled back. In commodities, investors placed both long and short bets on silver in September during a month when silver prices pulled back after a strong run since the end of March.
The S&L Monthly Flows report can be accessed here.
Equity markets await US fiscal stimulus
12 Oct 2020US equity markets appear to be bouncing back in October following a lacklustre month in September. The focus has now shifted on the upcoming fiscal stimulus in the US which is expected to play a crucial role in markets in the coming months. US Federal Reserve (Fed) Chairman Jay Powell has previously emphasised how important the fiscal stimulus will be, in addition to all the monetary stimulus, for the economy as well as markets. The NASDAQ 100 Index is up 2.7% while the S&P 500 Index is up around 3.4% so far in October (as of 12 October).
Italian BTP yields decline steadily
12 Oct 202010-year Italian government bond (BTP) yields have declined sharply in recent weeks and now stand at around 69bps (compared to over 2.4% in March). This suggests that the economic outlook for the country is improving gradually. While indicators like manufacturing Purchasing Managers Index have improved in the last 3 months, investors will be keeping a close eye on September gross domestic product (GDP) growth, inflation, and unemployment data hoping for a steady improvement to justify the decline in yields. Second wave virus risks remain rife given daily new cases are still on the rise in the country.
Strong returns for lean hogs while other commodities wobble
12 Oct 2020Agricultural and livestock commodities generally had another good month in September, but some stood out more so than others. Lean hogs have made strong gains of over 45% since the start of September (as of 12 October) leading the group by a wide margin and entering positive territory year-to-date. In 2019, African Swine Fever in China had cut the country’s pork production by 21.3%, and a further 19% loss in production happened in the first 6 months of 2020 (on a year-on-year basis). As a result, there has been a rapid rise in pork imports notably from the US and Spain. In the first 6 months of 2020, China imported 407,896 tons of pig meat and 130,061 tons of pork offal from the US, 503.3% and 85.6% increase respectively on a year-on-year basis (Source: IQC Insights). The most recent spike in lean hogs in September has been triggered by swine fever being discovered in Germany causing markets to speculate a similar effect on Germany's pork market as what happened previously in China.
The Commodity Monthly Monitor – Awaiting a US fiscal stimulus
12 Oct 2020In our latest commodity monthly monitor, we outline how commodities responded to the pullback in equity markets in September highlighting the main macro drivers for the asset class. Commodities, like equities, will be impacted by the upcoming US fiscal stimulus.
Our commodity monthly monitor is a comprehensive resource for the latest data and insights on commodity markets across different sectors. The latest edition of the document can be found here.
This Week’s Economic Calendar
12 Oct 2020Key events on the calendar this week are as follows:
• Tuesday 13 October 2020 Germany inflation (Sep)
• Tuesday 13 October 2020 US inflation (Sep)
• Thursday 15 October 2020 China inflation (Sep)
• Friday 16 October 2020 Italy inflation (Sep)
• Friday 16 October 2020 Eurozone inflation (Sep)
Copper leading the industrial metals basket
05 Oct 2020Copper prices have made a strong recovery since the end of March and outpaced the rest of the industrial metals basket since then. Copper is now well inside positive territory this year while the Bloomberg Industrial Metals Subindex is broadly flat year-to-date after recovering its losses from earlier in the year. Manufacturing Purchasing Managers Indices – an important barometer of industrial metal demand – have continued to improve for major economies although the basket has pulled back in September due to a broader retreat in cyclical assets.
Election uncertainty clouds US stocks
05 Oct 2020Uncertainty surrounding the US presidential election and potential volatility in markets leading up to it is currently weighing on US stocks. A heated debate took place between the two candidates on Tuesday 29 September raising fears of a tense political climate in the coming weeks. The NASDAQ 100 Index has made gains of almost 30% year-to-date (on a total return basis in USD as of 05 October) despite being down almost 6% in September.