- But, yield curve will move toward steepening...
- U.K. sales data upbeats while the woes about next year remains...
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1. President Draghi surprised with a dovish “work and assess” stance.
Some market participants start to revise year-end targets of yield and EUR/USD. Some researchers of short-bias in bond markets lowered year-end target in both of U.S. and Europe while remain recommendation to short duration.
He may have considered recently weak trade data contributing negative in growth.
2. EMU Trade Surplus Contracts in August
The EMU trade surplus contracted sharply in August, falling by 2.5 billion euros month-to-month. Still, the surplus is smartly higher year-over-year. Both exports and imports are losing momentum.
3. But, yield curve will move toward steepening under expectation of lowering policy rate and upcoming higher inflation rate. So, after December ECB meeting, even though they lower deposit rate by 10bps and expand both of the size and period for QE as he pursues overshooting, market participants may recognize it as a last thing... So, some argues German bunds 10 year yield will soar...
4. Manufacturing in Europe has come up lame again in October, but upbeats market expectation.
5. U.K. retail sales surged in September, rising by 1.4% after a 0.8% August decline
Clothing and footwear sales remained weak in August as they fell by 1.8%, their second fall in three months. Food and beverage spending rose by 2.3% in September, but that was after two straight months of declines. Overall, however, sales have been much more consistent and consistently positive.
6. But, someone argues there may be slowdown next year as fiscal policy tightens and strong sterling bites...
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