Review of October 12 – October 16: the chances of a rate hike fall. Forecast for the week October 19 – October 23

By | October 18, 2015

Equity markets continued to rise last week, to the extent that as I have done macroeconomic showgirl gave reason to expect that the Fed still will not hurry to raise interest rates in 2015. Retail sales for September were worse than expected, and the consumer price index recorded zero inflation over the same period last year. At a time when the external sector, uncertainty reigns, private economy is slowing and inflation is low, rush to the tightening of monetary policy does not make sense. Accordingly, investors continued to buy shares. S & P 500 ended the week added 1,1%, NASDAQ 2,1%, and the Dow Jones 1,0%.

Oil prices are the main reference varieties were under pressure after OPEC production growth recorded in September by 110,000 barrels, while statistics from China signaled that the second economy in the world, is also the largest importer of oil, continues to slow down. After the Energy Information Agency reported a decline in production in the United States by 130 thousand barrels per day in September, investors believe that the reduction in production is offset by increased production from the cartel, but now this assumption was doubtful. Reduced inflationary pressures in China and the low reading of the index of business optimism leads to believe that the “Middle Kingdom” is also affairs are not the best way. Brent fell by 4.4% and WTI of 4.2%.

Gold continued its steady growth, as reducing the probability of a rate hike in December, will continue to put pressure on the dollar. The “yellow metal” peaked at 3.5 months, touching the mark of 1189 dollars per troy ounce.

Chart of the week:

Gold chart

The economic data of the last week:

  • Tuesday. Eurozone: September index of business sentiment in Germany by ZEW Centre for Economic Research was 1.9 points against 6.8 median forecasts
  • Wednesday. US retail sales for August. The core figure was significantly lower than expected, -0.3% vs. -0.1%
  • Thursday. US: Consumer Price Index (CPI) for September was 0.2%, and coincided with the expectations of investors
  • Friday. US consumer confidence index from the University of Michigan in September exceeded expectations. 92.1 points versus 88.8
Forecast for the week October 19 – October 23
Stock market
The main event for the US stock markets in the coming week will be Janet Yellen speech at an economic conference in Washington. However, the Fed chief will just keep a short speech at the opening of the event. However, in periods of high uncertainty about interest rates, investors have traditionally hang on every word of the Fed, and in the absence of key macroeconomic statistics, it will be the main event of the week. Futures on major indices are on the path of steady growth, feeling the support near the key moving. Such dynamics of their signals about the potential for further growth. In the case of overcoming the resistance of 4141 NASDAQ-100 (NQ) will head to yearly highs in 4683.
On the corporate front, we should note that quarterly reports will present Harley Davidson (HOG, October 20), Yahoo! (YHOO, October 20th), American Express (AXP, October 21), The Coca-Cola Company (KO, October 21), Microsoft (MSFT, October 22).
Commodity and raw market
Oil market participants will be looking forward to an extraordinary OPEC meeting technical. It is expected that it will raise the issue again, Venezuela lower production volumes. However, it is unlikely to find understanding among the leaders of the cartel, led by Saudi Arabia, and can only add negativity. Representatives of Kuwait last week opposed the reduction of quotas and Saudi Arabia regularly increasing production. Vladimir Putin meets with influential representatives of the Middle East last week ended without result. December Brent contract will continue to fluctuate in the range of 47-54 dollars per barrel in the foreseeable future. Accordingly, near the bottom boundary of interest buying and selling at the top.
Currency market
Bidders single European currency will wait the outcome of the meeting of the European Central Bank. The European Central Bank is implementing a program of quantitative easing, but again faced with a slowing economy and deflation threats. Exports from Germany falls, despite the weak euro. Dynamics of the leading indicators signal a slowing down an already weak growth throughout the euro zone. Perhaps the discussion of new incentives. If it is confirmed at a press conference, Mario Draghi, the euro will be under severe pressure. The EUR / USD could fall into the area of ​​1.11.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.
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