For the moment Evergrande is making its debt coupon repayments and that provided the markets with the excuse to buy risk assets and find some confidence. However there remain fears over the company’s ability to repay near term coupons.
Out of the three central bank interest rate announcements last week only the Japanese were dovish with the FED and BoE both looking towards either reducing tapering or earlier than expected rate rises, pushing up US Treasury yields but without damaging stock indices. Whilst the FED and BoE stance was not a surprise it shows inflation is stubborn and thus a concern for central banks.
Economic data is a little light this week but will show the state of the US consumer economy and probably a restrained recovery. Jobless claims showed an increase last week as the final unemployment supports were removed at State level.
Away from economics, this weekend has the German population going to the polls. The race has narrowed sharply in recent days and is likely to lead to a good deal of indecision as the parties try to re-establish a new ruling coalition. This will leave Frau Merkel in caretaker charge for the next few months and herald the end of an era. If the election leads to greater division in German politics, it is likely, in tandem with higher yields, to lead to a EURO that struggles to make gains against the majors.
Gas price increases have caused concern around the world with the realisation how much it is relied upon for heating to electricity generation to fertiliser production. Reasons for the rally include greater than expected demand, move to green energy and Russia holding back supply, which is not the first time they have used commodity supply as a “foreign policy”.
Oil prices continue to rise as demand picks up and with field development being lessened as the world heads towards green fuels. A cold winter will only exacerbate the situation leading to further price rises; Goldman Sachs are calling for a rise to $90 a barrel.
Metals though continue moribund as China struggles to produce and the automakers hold back with the chip shortage.
Date | Country | Figures | Expected | Previous |
Sep 27 | USA | Durable Goods Orders | 0.6% | -0.1% |
Sep 28 | USA | Consumer Confidence | 114.5 | 113.8 |
Sep 29 | GBP | Nationwide house prices |
| 11% |
Sep 30 | GBP | GDP final QoQ | -1.5% | 4.8% |
| EUR | CPI YoY |
| 1.6% |
| USA | Initial Jobless Claims |
| 351k |
| USA | GDP Q2 |
| 6.6% |
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