In the data calendar focus will mainly be on US data

Market movers today

Fundamentals are taking a bit of a backseat in the market and it appears that nothing but calming words from central banks will be able to soothe the nervous financial markets. Hence, there will probably be a lot of focus on the flood of speeches on the calendar from several ECB members today: Coeure (08:45 CET), ECB vice-president Constancio (09:45 CET), Nowotny (10:00 CET) and Weidmann (11:00 CET). In addition, Fed chairwoman Janet Yellen is due to speak at 14:30 CET in connection with a conference on economic inequality, so the topic does not on the surface invite comments on monetary policy in general.
In the data calendar focus will mainly be on US data. Housing starts and building permits are both expected to rebound in September on the back of a weak August. The underlying trend still appears to be that housing starts are improving moderately. We expect University of Michigan consumer confidence to have been unchanged in October. The recent sharp drop in gasoline underpins consumer confidence while the recent decline in stock prices has probably weighed on consumer confidence.
Also continued focus on Q3 earnings with General Electric, Morgan Stanley and TeliaSonera reporting today.

Selected market news

As the first sign of serious concerns at the Fed about the latest sell-off in the market, FOMC member James Bullard (hawk, non-voter) yesterday in an interview on Bloomberg News said that the Fed should consider delay the ending of QE as inflation expectations are declining. “That’s an important consideration for a central bank. And for that reason, I think that a logical policy response at this juncture may be to delay the end of the quantitative easing”, Bullard said.

On the data front, US initial claims for jobless benefits came out very low at 264K compared with the consensus estimate of 290K this week. It is the lowest level since 2000 and the drop in claims points to strong momentum in the labour market and solid payroll gains in the coming months. Moreover, industrial production rose 1% in September from August, also well ahead of the consensus estimate of a 0.4% increase, suggesting that the US economy is doing fine at the moment.

The was slight relief in the negative risk sentiment last night and US equities managed to erase their initial losses after the very dovish comments from FOMC member James Bullard and the series of better-than-expected data out of the US. S&P500 ended the day broadly unchanged while yields on 10-year treasuries rose 2bp to 2.157%.

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