Summary:
- Chicago PMI and CB consumer confidence come in better than expected
- Canadian GDP unexpectedly drops
- US stock markets near record highs halfway through earnings season
- Bitcoin hits all-time high as CME prepares to offer futures contract
- Eurozone inflation slows with flash CPI missing forecasts
- Poloz speech and NZ employment data due out this evening
On a big week of data from the US, the world’s largest economy has gotten off to a good start with both the Chicago PMI and the Conference Board consumer confidence coming in better than forecast. The Chicago PMI rose to its highest level since March 2011 in October and a reading of 66.2 against consensus forecasts of 60.2 and a prior reading of 65.2 is clearly strong.
The Canadian economy unexpectedly contracted in the month of August with the GDP M/M coming in at -0.1%. The release is the second consecutive disappointment for this reading with a consensus forecast for a 0.1% rise against a prior print of 0.0%. The Y/Y reading remains strong at 3.5% but again this was below expected with forecasts for a 3.6% increase.
Watch a short video on US stock markets here.
Wall Street was able to establish its new all-time high during October which was supported by revived hopes for a so-called “Trump Trade”. In addition, the earnings season is already well underway and decent reports prop up higher stocks’ prices. That said, investors may look for an answer for a key question: could stocks be prone to wipe off some of their gains after a stunning rally?
Octoberphobia is the name given to the fear of the current month due to several previous instances that have seen large declines for the US stock market (1987, 2008 etc). Since 1950 when the S&P500 (US500 on xStation) has gained more than 5% from May to October the market has performed very well going forward. The median gain into year-end when this caveat is met is 5.2% with an incredible 87% of the years seeing positive performance.
Bitcoin has surged to an all-time high today on news that the CME will offer futures contracts on the market before year-end. Price is higher by more than 4% at the time of writing. As interest in the market grows it is gaining increasing attention from governments. Iran has reportedly been conducting research into the economic and infrastructural aspects of preparing for Bitcoin use in its country.
The latest data from the Eurostat revealed that inflation across the euro area slowed down this month from 1.5% yoy to 1.4% yoy while the market consensus had pointed to the unchanged value. Notice that weaker readings from Germany and Spain dragged down the inflation rate in the whole European economy while France managed to bump up its pace.
Looking ahead there is a speech from BoC Governor Poloz scheduled for 7:30 PM (GMT) where he is expected to testify before the House of Commons Standing Committee on Finance in Ottawa. New Zealand employment data is scheduled to be released at 9:45PM (GMT) with the unemployment rate expected to fall to 4.7%.