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As reported by Reuters, there are five main themes hanging over markets heading into the new week.

Key quotes

“Brent oil hit $80 a barrel this week – good news for exporters like Saudi Arabia and Russia but less so for importers such as India and especially those with big current account deficits, like Turkey. The loss of Iranian supply into an already tight market should keep prices elevated for now.  There’s another barrier to consider: Donald Trump. The U.S. president has complained repeatedly about oil prices, demanding OPEC action to bring them down. And he was doing that when oil was lower than it is today, so another tweetstorm from the White House would be a surprise to pretty much nobody.

When the Bank of Japan meets next week, it will scrutinize market moves since its July decision to allow bond yields more flexibility around its zero percent target. There won’t be much to look at, though.  Despite Governor Haruhiko Kuroda’s assurance the BOJ will allow 10-year yields to stretch to around 0.2 percent, they have been caught in a tight range around 0.1 percent. It’s proving difficult to revive a market that has seen liquidity dry up as a result of the central bank’s huge purchases. This in turn means strains on the banking sector will remain in focus. For now, the BOJ may blame sticky yields on a summer lull and prefer to wait for longer before drawing any conclusions. But policymakers will also have to debate the risks that global trade frictions pose to the export-reliant economy. They’ll notice there was no holiday lull in the rest of the world.

Turkey may have delivered a chunky 625 basis-point interest rate rise but similar fireworks are unlikely at next week’s crop of central bank meetings in emerging markets. Nevertheless, with inflation and growth worries rising across the developing world and policymakers engaged in a delicate balancing act to calm investors, markets will watch for the sort of signals central bankers send.  

The mood music on UK retail is pretty dire. Sector bellwether John Lewis just told investors that its first-half profit was all but wiped out – down 99 pct as the store chain was forced to match discounting by peers.  Its struggling rival Debenhams plumbed new record lows after telling adviser KPMG to examine radical restructuring options for the group.  Overall, earnings growth for retailers on the FTSE 350 has slowly crept up since the Brexit vote, but is still a way from recovering to pre-June 2016 levels.

U.S. existing home sales have hit a wall, falling for four straight months, and next week could bring news that they slipped again last month.  A decade after the financial crisis – which had its beginnings in the U.S. housing market collapse – sales of preowned U.S. homes remains more than 25 pct below its pre-crisis peak. The sales pace has dropped nearly 7 pct from its post-recession high last November. What’s keeping a lid on sales? In a word: supply. The number of homes for sale is stuck near a record low and inventory growth has been negative on a year-over-year basis every month for more than three years. That is driving prices to a record with annual sales price increases of nearly 5 pct. Many economists believe the steep prices are cutting into affordability, and the limited number of homes for sale is dissuading current owners from putting their homes on the market to trade up.”

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