10-year Bund closed at 0.95 % on Friday. Geopolitics still high on the agenda. US CPI, FOMC minutes and Euro-area PMIs later this week. Interesting news from Jackson Hole? Little bond supply this week.
Let’s start by drawing a line under last week: We saw new record lows for 10-year Bund yields (0.95% on Friday), US Treasury yields dropped 8bp w/w, Euro Stoxx 50 was up 0.9% w/w, S&P 500 rose by 1.2%. EURUSD was unchanged. This week, any new developments in geopolitical hotspots could easily drive markets again, all the more so as there are no important central bank meetings and few major data releases on the agenda. Some political commentators feel that tensions might be easing somewhat. Let’s see. If true, we could see market movements driven by relief.
Chinese house prices came in below expectations (2.5% y/y in July, down from 4.2%) and declined over the month for the third time in a row. In our view, construction investment activity is not likely to recover any time soon.
Data and events – not much and then Jackson Hole
No hugely important indicators are on the agenda today, unless you find the NAHB housing index very exiting. Consensus goes for no change. US CPI numbers will be out tomorrow and FOMC Minutes on Wednesday. Thursday brings Chinese and Euro-area PMIs.
This week’s key event could be Fed chairman Yellen’s speech on Friday at the Jackson Hole conference. Everyone will be closely listening to find out whether she is changing the dovish outlook for monetary policy so far outlined for the coming years. We expect no hawkish surprises from the Wyoming mountains.
Not much bond supply
France is scheduled to sell bills today. Germany comes with a 2016 Schatz on Wednesday (€ 5bn).
Nordea