There is no bright news on the horizon on Japan as Eurozone hold on strong thanks mostly to Germany? Switzerland also defying the chokehold of strong CHF. It seems we are nearing the inflection point for Germany, Switzerland and UK for the worse turn in economy. My estimate is late Oct when we start seeing some trace in data. These could be big trades for Q4.
Markets were quiet – minimal actions in stocks, currencies, bonds and commodities. The exception was in energy where much greater than expected draw in refined products sent all energy futures up.
Japan Tankan survey – current sentiment is OK but outlook is deteriorating
• The Bank of Japan's September tankan survey results, published before the opening bell, showed that sentiment among the country's big manufacturers picked up for the sixth consecutive quarter. But the survey also showed that companies expect conditions to worsen sharply over the coming quarter.
• Sentiment among small businesses may fall more than at larger ones in five of six export-driven industries, such as automobiles and machinery, the survey also showed.
• “The Tankan shows the strengthening yen hurts the confidence of manufacturers, with small businesses especially vulnerable to the currency’s gain,” said Daisuke Uno, chief strategist at the unit of Japan’s third-largest banking group. “More small and midsize firms may reduce capital spending to secure cash on hand. The survey also points to their difficulty in raising funds.”
Eurozone business confidence rises to near three-year high
• Businesses in the 16 nations that use the euro continued to become more confident about their prospects in September, while consumers became less upbeat about the economic outlook.
• Business and consumer confidence in the 16-nation eurozone jumped to the highest level for nearly three years in September with a strong gain in Germany, an EU survey said on Wednesday.
• The improvement in sentiment was driven by a surprise rise in the measure of industrial confidence to -2 from -3 in August. Economists had expected a decline to -5. Manufacturers reported an improvement in order books, in part due to a continued pickup in export orders.
• Sentiment was also up in other industries – services, retail and construction.
• However, consumer confidence dipped slightly : Consumers became less fearful of losing their jobs, but less optimistic about the economic outlook, and the headline measure of confidence was unchanged.
• Germany continues to outperform leading the Eurozone. Remains to be seen whether this can continue. I continue to believe that Germany will see notable slowdown later in October.
UK consumer confidence deteriorates
• U.K. consumer confidence fell sharply in September, with the headline measure dropping to -17 from -13 as Britons became much more downbeat about the economic outlook and more fearful of losing their jobs.
• UK is about to see some very restrictive austerity measures start getting implemented soon and I expect it to be a huge drag in economy. I don’t like GBP. I am thinking going long gilt vs bund or treasury might be a good trade but need to research deeper into UK economics.
Swiss’ leading indicator (KOF) remains stable
• The KOF indicator – which attempts to forecast economic condition in about 6 months time – remained stable which is better than analyst forecast. This indicator had been up 14 straight months.
• The Swiss PMI, meanwhile, continues to strike record highs. For the time being, at least, there seems to be no evidence that the strength of the CHF is hurting the Swiss economy.
• At its monetary policy review on Sept. 16, the SNB kept its interest rate target unchanged at an ultra-low 0.25 percent, predicting a significant slowdown as the strength of the Swiss franc and the cooling of the global economy hit the Alpine country.
• The euro zone is Switzerland's biggest trading partner, and the Swiss franc has appreciated more than 10 percent against the euro since the start of the year, prompting business groups to warn exports could be hurt. But so far Swiss economy has been able to endure the strong currency just fine unlike Japan.
Energy up on declines of refined products inventory
• Crude oil rose to a seven-week high after a U.S. government report showed unexpected declines in supplies of gasoline and distillate fuel as refiners cut
• operating rates to the lowest level since April.
• Gasoline inventories fell 3.47 million barrels to 222.6 million in the week ended Sept. 24, the Energy Department report showed. They were forecast to rise by 350,000 barrels, according to the median of 14 analyst estimates in a Bloomberg News survey.
• Distillates, including heating oil and diesel, declined 1.27 million barrels to 173.6 million, compared with a forecast increase of 325,000 barrels.
No comments:
Post a Comment