Market themes of the Day: UK retail set to slump in September

What you need to know before markets open
Main themes:

• Irish Foreign Minister Coveney warned markets of possible Brexit summit outcome saying that “people should not panic if there is no deal this week.”
• The Brexit summit turned into failure as expected with the EU officials hardening the stance saying European Union leaders dropped plans for a Brexit summit in November because not enough progress has been made.
• UK inflation decelerated above expectations to 2.4% y/y in September weighing on Sterling together with possible no Brexit deal scenario at Brexit summit. 
• The September FOMC minutes showed continued support for gradual rate hikes, indicating that most Fed officials are comfortable with hiking modestly beyond their estimate of the neutral policy. 
• The UK retail sales headlines Thursday with total sales expected to slump -0.4% m/m in September. For more details read my Preview here. 

Australia

• Australian unemployment rate tumbled to 5.0% in September, well below the 5.3% level forecast by economists with employment rising 5.6K, missing 15K estimate.

Europe

• The Eurozone inflation rose 2.1% y/y in September meeting the market forecast while core inflation failed to pick up remaining at 0.9% y/y.
• Deutsche Bundesbank President Jens Weidmann said it is right from the EU officials to demand fiscal responsibility and be “very critical” o Italian budget proposal. 

UK

• Irish Foreign Minister Coveney warned markets of possible Brexit summit outcome with no deal done suggesting that EU’s chief Brexit negotiator Michel Barnier has offered an extension to the transition period for the UK.
• The Brexit summit saw no Brexit deal done as officials indicated little progress was made since October, ditching the plan for November summit.
• The UK headline inflation decelerated unexpectedly strongly to 2.4% y/y in September with core inflation stripping the consumer basket off food and energy prices remaining at 1.9% y/y. For details read my Analysis here.
• The UK retail sales are expected to fall -0.4% m/m in September with retail sales excluding motor fuel sales falling -0.4% m/m. For more details read my Preview here.  

US 

• Initial jobless claims are expected to reach 206K in the week ending October 12 from 214K a week ago.
• Philadelphia Fed manufacturing index is seen decelerating to 20.0 in October from 22.9 in the previous month. 
• Federal Reserve Governor Randal Quarles is expected to speak about the economic outlook at the Economic Club of New York luncheon at 16:15 GMT.