Getting Ducks Lined Up For Later In The Week

Overview: The global capital markets are consolidating ahead of this week's big events, which include the FOMC meeting, US jobs, an important Brexit vote in the UK parliament and the first look at Q4 EMU and US GDP.  The US dollar is narrowly mixed. Equities are mostly lower. European benchmark 10-year yields have edged up, though the US 10-year yield is struggling to hold above 2.75%. The US government will re-open after the longest partial shutdown in history, but the agreement only covers through February 15, leaving open the possibility of another closure if a deal is not struck. Crude oil is trading heavily with the front-month Brent and WTI off nearly 2%. The March WTI contract has remained in a $50-$55 trading range for the past three weeks. Gold moved above $1300 an ounce for the first time since last June. It recorded an outside up week by trading on both sides of the previous week's range and closing above that high. Technical considerations suggest that there may be upside near-term.  

Asia Pacific

The week has begun slowly, and Australian markets were closed for a national holiday. Ahead of the trade talks in Washington starting later this week, the PBOC announced that it had approved S&P Global into China's credit rating market. Other international credit rating companies hope China makes good on its pledge to allow additional foreign rating agencies to operate domestically. Separately, China reported that industrial profit fell (1.7% year-over-year in December). Last December, they had risen (10.8%) and is consistent with the economic slowdown and challenges the country faces.  

After contracting in Q3, Japan's economic recovery in Q4 appears spotty and uneven. This week Japan is expected to report that industrial output fell for the second month in December. On the other hand, household demand may have improved, and retail sales are expected to have bounced back after a sharp 1% decline in November. Australia reports Q4 CPI figures tomorrow, and softer price pressures may weaken the currency, as investors appear to have begun discounting a rate cut. China's official PMI is expected later this week. 

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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