In a global market wrap, analysts at ANZ Bank New Zealand explained that European risk had a rollercoaster day as Italian BTPs sold off sharply early in the session, with the spread to bund yields widening out to 316bps.
Key Quotes:
“European bourses were also down. But later in the session, European markets more than retraced their losses, after the Italian Finance Minister emphasised the need for “constructive dialogue” with Europe. 10-year BTP spreads to bunds fell back below 300bps, the DAX closed up 0.3% and other continental bourses were also higher.”
“Nonetheless, investors remain nervous and markets are jumpy and somewhat illiquid. US markets were fairly steady (S&P down 0.2%). US 10-year yields dipped 2bps to 3.21%. Oil was 1.2% higher and gold was broadly unchanged.”
DATA/EVENT PULSE
STILL STRONG:
“The US September NFIB business index was 107.9, a touch weaker than expectations, reversing August’s 0.9pt rise. The index is still hovering at record highs and consistent with exceptionally strong GDP growth: 29% of firms expect higher sales and 33% of firms think it’s a good time to expand. Net compensation rose to an index high at 37% from 32% suggesting rising wage pressures are broadening. A net 24% of firms plan to increase compensation from 21% in August.”
LOOKING SOFT:
“Canadian housing starts came in at an annualised rate of 188.7k in September compared with 210k expected – the weakest level of starts since late 2016. The 6-month moving average stood at a 19-month low in September, following declines in four of the last five months.”
DOWNGRADE:
“In its latest world economic outlook, the IMF cut its global growth forecasts for the first time since July 2016, citing trade tensions and stresses in financial markets. They noted that downside risks have risen.”
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