Independent Investor News and Updates - Part 2

Week Ahead: Trump’s First State of the Union Address, US Inflation & FAANG Earnings

Author: Phil Evans / In News

After a rout in the US dollar focus shifts to whether inflationary pressures are building enough to persuade the Federal Reserve to hike more aggressively than it has been doing. State of the Union Address President Trump sets out his priorities for the year ahead and recaps the last 12 months in his first State of the Union address on Tuesday night. Following mixed messages on the US dollar, the main focus of the markets is trade and whether the administration plans to ramp up the protectionist agenda. US Inflation The Fed’s preferred measure of inflation, the core personal consumption expenditures (PCE) index, arrives on Monday after a sharp pullback in the US dollar and a rally in US Treasury yields. The data is the last of any real importance before the Federal Reserve convenes this week and will be important for shaping market expectations for USD. Core PCE has undershot the Fed’s target since 2012 and the persistent lack of inflation last year surprised many. But the most recent CPI inflation figures may suggest we’re in for an uptick. […]

Week Ahead: Davos, ECB, Earnings and US GDP in Focus

Author: Phil Evans / In News

As earnings season on Wall Street hits full pace and the great and good of finance convene in Davos for the annual World Economic Forum, forex traders are looking at the first European Central Bank meeting of 2018 and the preliminary GDP prints for the final quarter of last year from the US and the UK. World Economic Forum in Davos Donald Trump says he’s attending and just about every other important name in world finance should be in attendance at some stage for the annual World Economic Forum in Davos. In addition to trade, top of the agenda may well be cryptocurrencies. Bitcoin and other cryptos suffered large falls last week as the regulatory noose appeared to tighten with South Korea and China making moves to ban trading. The Davos forum may offer policymakers the first chance to discuss a more unified regulatory approach to cryptocurrencies ahead of the G20 later in the year. Suffice to say that the cryptocurrency market is in the cross-hairs of regulators in 2018. ECB Policy Meeting After EURUSD hit three-year highs, the focus […]

Week Ahead: Earnings Season Builds, Bank of Canada Set to Hike

Author: Phil Evans / In News

The Bank of Canada is widely expected to raise rates this week as earnings season on Wall Street looks likely to drive global equity markets. Wall Street Earnings Banks unofficially kicked things off last week and now earnings season on Wall Street gets into full stride. Financials make most of the running with Citigroup, Morgan Stanley, Bank of America, Goldman Sachs and Bank of New York Mellon all set to report quarterly earnings. Of those Goldman is the only Dow Jones component, although American Express and UnitedHealth Group are also set to release earnings. You can read our US earnings preview here. Bank of Canada With the latest labour market figures showing Canada’s unemployment rate at its lowest in 40 years, the country’s central bank is expected to raise rates this week. Jobless numbers reveal slack in the labour market has diminished significantly even after the Bank of Canada begun raising rates last summer. The jobless rate declined to 5.7% in December, the lowest level since figures began in 1976. Meanwhile the BoC’s own quarterly business survey paints a picture […]

Week Ahead: US Banks to Kick off Earnings Season on Wall Street

Author: Phil Evans / In News

Corporate earnings pick up steam on both sides of the Atlantic, while in FX the main focus is the monthly CPI and retail sales data from the US. US Retail Sales & Inflation The US inflation conundrum rears its head once again with CPI data for December due on Friday alongside the monthly retail sales release. Figures for November showed a slowing in core inflation, putting the spotlight on whether the Federal Reserve ought to be hiking interest rates as often as it intends in 2018. Core CPI slowed to 1.7% from 1.8% in October and if this trend were to continue the market – which already doubts the Fed will hike 3 times this year – will carry through with its intended path of tightening. Wall Street Earnings On Wall Street, earnings season kicks off properly this week with the release of Q4 earnings from the big banks. Wells Fargo and JPMorgan Chase & Co get the ball rolling on Friday. Q3 earnings were positive but a decline in fixed income trading revenues weighed as volatility remains very low. […]

Week Ahead: Nonfarm Payrolls, FOMC Meeting Minutes on Tap

Author: Phil Evans / In News

The New Year kicks off with a bang as traders return to their desks. US nonfarm payrolls and minutes from the most recent FOMC meeting are on tap, while a trading update from Next is the main event on the corporate front. Nonfarm Payrolls The major event is the monthly US labour market snapshot offered by the nonfarm employment change and average earnings data for December. Nonfarm payrolls increased by 228,000 in November as unemployment held steady at a 17-year low of 4.1%. Average earnings continued to climb at a rate of 2.5% annually. While the headline number grabs the most attention, arguably of greater importance in terms of the US dollar and expectations for future interest rate hikes is the unemployment rate and wages. In its latest economic projections, the FOMC revised its unemployment forecast down from 4.1% to 3.9% in 2018 while core inflation will not improve any faster than previously thought. Therefore traders will be looking for signs that either the unemployment rate is moving down towards the Fed’s target or if wage growth is improving more […]

Week Ahead: Will There Be a Santa Claus Rally?

Author: Phil Evans / In News

A quiet period for some but the week between Christmas and New Year can often see a rally in equities. Heading for a Santa Claus Rally? Stocks usually rise in December, so the data tells us. But most of the gains are reserved for later in the month and the so-called Santa Claus Rally, which strictly speaking is the ramp up in equities in the final week of December and first two trading days of January. The FTSE 100 has risen in December in 25 of the last 30 years. On average, the blue chip has delivered returns of 2.35% in the final month of the year going back to 1987, according to our analysis of Bloomberg data. Last year, the index climbed 5.29%, snapping a run of two years in which the market had fallen in December. The four major US indices – the Dow, S&P 500, Nasdaq 100 and Russell 2000 – have on average gained at least 1.8% in December for every year since 1987, according to analysis from CNBC and Kensho. But with indices already at […]

Week Ahead: CME Bitcoin Futures Launch, US Inflation and GDP Prints

Author: Phil Evans / In News

Inflation data from the US and Eurozone are the last big economic releases of the year, while the Bitcoin craze continues with the launch of futures by CME. CME Bitcoin Futures The launch of Bitcoin futures by CBOE delivered the wild ride that most expected. Trading was halted twice in the first few hours as prices rocketed, although volumes were pretty thin. In a sign of just how fragile and fractured the market can be, the spread between the underlying spot market and prices on futures contracts was as wide as $2,000 at times. Following this, CME Group, the world’s largest futures exchange, will launch its own futures contract on Monday, Dec 18th. CME Bitcoin futures will be based on the CME CF Bitcoin Reference Rate (BRR), which aggregates trading activity across major spot exchanges between 15:00 and 16:00 London time. Final GDP Readings On the data front, the third and final Q3 GDP readings for the US and the UK are due this week. Annual growth in the US surged to 3.3% in the third quarter, according to the […]

Week Ahead: Fed to Outline Path for Rate Hikes in 2018

Author: Phil Evans / In News

Central banks are the focus this week with the Federal Reserve, European Central Bank and the Bank of England all in action. With the ECB and BoE expected to stand pat, the Fed is the star attraction as it is anticipated to raise rates again and release fresh forecasts for hikes in 2018 and beyond. Federal Reserve The Federal Open Market Committee (FOMC) is all but certain to raise interest rates again on Wednesday, with markets pricing in a roughly 90% chance that the target federal funds rate will be increased by a further 25 basis points. The focus for market participants is therefore on the updated economic projections and the so-called dot plot, which sets out how policymakers see the likely path of interest rates. With tax reform now firmly on the agenda, it is anticipated that policymakers may raise their forecasts. This could see the median fed funds rate projection for 2018 pushed up from 2.1% to 2.3%, or even 2.5%, suggesting a higher likelihood the Fed will hike 4 times next year. Markets are currently only pricing […]

Brexit Crunch Lunch and US Nonfarm Payrolls

Author: Phil Evans / In News

Despite a paucity of corporate earnings, there is no shortage of fodder for traders as we approach a key moment for Brexit, the final nonfarm payrolls release before the Fed’s December meeting and a good smattering of PMI releases to chew on. Brexit Monday kicks off with British prime minister Theresa May in Brussels for lunch with European Commission president Jean-Claude Juncker. It is hoped that a pledge to offer more cash for the divorce bill will uncork talks on Britain’s future relationship with the EU. Whilst the financial settlement appears to be resolved, it is unclear whether ‘sufficient progress’ has been made on the contentious topics of the Irish border and citizens’ rights. GBPUSD rallied on news that the UK was prepared to up its offer, but the bulls have been kept on a fairly tight leash since as there are still numerous doubts about whether the European council will officially recommend moving onto the next phase of the negotiations at its meeting on December 14-15th. NFP Fridays sees the release of the final nonfarm payrolls and average earnings […]

Week Ahead: OPEC Meeting, UK Bank Stress Tests

Author: Phil Evans / In News

Oil is the asset in focus as OPEC discusses a potential extension of production curbs, while in equities all eyes are on British banks with the Bank of England’s stress tests due out. OPEC Oil grandees from the Organization of Petroleum Exporting Countries (OPEC) convene in Vienna for their semi-annual meeting on Thursday, November 30th. The key topic for discussion will be whether to extend the 1.8m barrel-a-day production curbs due to expire in March 2018. Current market consensus is that members, along with Russia, will agree to prolong the output controls as they seek further rebalancing in the oil market. Expectations are high. Crude prices jumped to two-year highs ahead of the meeting in anticipation and speculative net long positions are at record highs, according to CFTC data. With the market positioned this long, it may be tough for OPEC to deliver enough to see crude futures rally any more. Another factor that could keep a lid on any gains for crude is the presence of US shale. The International Energy Agency has recently trimmed its demand guidance for […]