Market movers today
Only tier-2 data on the agenda today. The US Empire survey will give a first clue about business confidence in September. It is expected to still be at a robust level of 15. Industrial production data for the US are expected to have risen 0.3% m/m in August.
Developments in the Ukraine crisis will continue to be in focus and the Scottish referendum will attract more attention as we head towards the vote on Thursday 18 September. Polls are pointing in all directions at the moment and the campaign on both sides is likely to intensify even further this week.
The Fed meeting on Wednesday will also be in focus. We see a 50-50 chance of a change to the forward guidance, as retail sales Friday provided yet more news that the economy is gaining strength.
Selected market news
The global stock markets are off to a shaky start to the week. On Friday the major US stock market indices declined moderately and this morning the Asian stock markets are mostly trading lower. Stock market investors are worried that the Federal Reserve as this week’s FOMC meeting might change its communication to a more hawkish stance.
These expectations come on the back of better-than-expected US economic data in recent weeks and it is clear that a rate hike from the Fed is moving closer. This is also visible in the US bond markets, where yields continue to rise on expectations of a rate hike sometime next year.
The US dollar continues to rally – driven by expectations of a more hawkish Fed. The strengthening of the dollar and higher US bond yields hurt Emerging Markets’ currencies and we could easily see more volatility in these currencies if the strengthening of the dollar continues.
Commodity prices are also trading lower this morning on the ‘Fed fears’ and worries about Chinese growth.
As expected, the left won Sunday's parliament elections in Sweden. The Social Democrats leader, Stefan Löfven, will now try to form a coalition government. In that regard, it should be noted that the leftist parties do not have an outright majority in the Swedish Riksdag and Löfven will therefore have to seek support from one or more of the centre-right parties. The anti-immigrant party, the Swedish Democrats (SD), did well at the elections, winning 13% of the votes. The centre-right as well as centre-left have ruled out cooperation with SD.
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