US pending home sales figure released later today

• Market selloff continues as markets look towards key week

• Spanish CPI leads thoughts to tomorrows headline CPI reading

• US pending home sales figure released later today

US markets look set to run into further downside today following a disappointing start to the week in Asia and Europe. With the busiest week of the month ahead of us, today marks a rather slow start, where many will begin positioning themselves ahead of the potential volatility due later on in the week. The US markets are expected to open lower, with the S&P500 -6, Nasdaq -14 and DJIA -63 points.

Today’s selloff is widely consistent with the wider trend of selling that has been in place over the past week. Weakness within European indices have uncharacteristically led their US counterparts, with the FTSE100 tumbling over three weeks ago, yet this has only recently been reflected just over a week ago in the likes of the S&P500 and Dow. Much of this is no doubt in relation to the threat of devolution that has hit the European project, with the Scottish independence vote now being followed by the same thing in Catalonia. However, within the US, the feeling is more that we are moving ever closer towards the moment where the Fed finally announce a timeline for interest rate hikes, which is only a matter of time. The increasing noises from the FOMC has been one of inevitability in terms of interest rate hikes and whilst Janet Yellen remains tentative to provide an official change of outlook from the Fed, this appears to be a matter of time. Last month saw the worst non-farm payrolls figure in 7 months, allowing Yellen a little more leeway to keep rate low, however with the US jobs report due on Friday, this could be called back into question before long should we see the 200k+ number expected by the markets.

Today’s European session held little for the markets, as the release of the Spanish CPI figure released some of the pressure upon Mario Draghi, rising to -0.5% to -0.2%. However, this and the German figure due later today, are really the precursor for tomorrows Eurozone CPI figure. Mario Draghi will certainly be hoping that Eurozone CPI will finally start showing some signs of resurgence after a year of incessant downside for prices in the single currency region. However, signs so far have given Draghi little comfort, pushing him into continuously reconsidering how accommodative the ECB should be. Last month’s decision to introduce an ABS scheme is a QE-lite of sorts and thus further action remains unlikely this month, yet the movement of the Eurozone CPI figure is sure to be absolutely key in determining whether markets expect to finally see the fully blown asset purchase scheme introduced.

Today’s US session also looks relatively light on major economic releases, with the main event of note coming in the form of the pending home sales number. Last week saw a real mixed bag from the US housing sector where a weak existing home sales number on Monday made way for a six-year high new home sales number on Wednesday which sparked markets back into life. With that in mind, today’s pending home sales number will give us an idea of where next month’s number could be and thus markets will be watching very closely at today’s figure. Market estimates point towards a fall back into negative territory with a number closer to -0.4%.