Analysts at Nordea Markets suggest that the upcoming week is likely be a week, when the stock market sets the tone across the financial markets, and they don’t judge that the FOMC meeting minutes on Wednesday night will offer a helping hand for the equity bulls.
“Recently the Fed has increased its attention on the risk of financial excesses. The minutes may shed some more light on this, which shouldn’t be seen as an equity bullish signal.”
“Early discussions on the issue that the effective Fed funds rate continues to edge closer to the interest on excess reserves (IOER-rate) could also be flagged in the minutes. We will not rule out another 20bp hike of the IOER-rate in an attempt to push the effective Fed Funds rate back towards the middle of the policy rate channel.”
“Elsewhere it is a relatively quiet data week, but a lot of attention will be given the Euro summit. The EU Council will meet 17-18 October, with a review of the state of the Brexit negotiations scheduled at a working dinner on Wednesday evening.”
“More or less no matter the content of the deal, we consider a deal in itself a GBP positive signal.”
“Lastly, you should have a watchful eye on the Chinese GDP figures from Q3 on Friday, as they will likely showcase at least part of the truth surrounding the health of the Chinese economy in these turbulent trade-war times. Momentum in the Chinese economy most likely deteriorated during Q3. We expect GDP growth to fall to 6.5% y/y from 6.7% in Q2.”
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