A night of consolidation for markets with inconsequential data not pushing markets one way or the other. The OECD joined other forecasters revising down its global growth forecasts for the second time in three months, while Fed President Rosengren was also singing to the same December lift-off tune. The AUD has been range bound against a marginally softer USD, while the Euro is touch weaker as Portuguese politics sees their bonds trade higher in yield, and more so relative to most other Eurozone counterparts (Spanish yields ticked slightly higher.)

In its half yearly Economic Outlook released overnight, the OECD forecasts the world economy to grow 2.9% this year and 3.3% next, revised down from 3.0/3.6% in September on emerging market weakness, Russia and Brazil in recession and China soft. For Australia, the OECD predicts 2.2% growth this year, picking up 2.6% in 2016 and 3% in 2015.

“All future committee meetings – including December’s – could be an appropriate time for raising rates, as long as the economy continues to improve as expected”. So said Boston Fed President Eric Rosengren overnight, stickingwith the pack in signalling that a December rate hike is “live”. While Rosengren has been one of the more dovish FOMC members, he’s been signalling a preference for a hike by year-end for some time. Overnight he cited the better-than-expected October US employment report and retail spending as offsets to export market weakness. He repeated his preference for gradual rises.

Portugal is threatening to flare up as a EUR issue. A month ago in the General Election, the main Socialist Opposition Party won the most seats but under the Constitution was controversially denied the opportunity to form a Government by the President. Today, the four main Socialist parties agreed to form a coalition to unite against austerity. 10 year bonds have risen 15bp to a four month high of 2.83%. The Euro is a touch weaker against a somewhat softer USD.

Coming up

After NZ card spending data for October at 845 AEDT and weekly ANZ-Roy Morgan consumer confidence at 9.30, the market will be focusing on the NAB Business Survey for October at 1130. (There is also ABS Housing finance approvals at 11.30 and Japan’s current account figures at 1050 AEDT.) Recall that in September, for the NAB business survey, there was a partial recovery in business confidence in the wake of the government’s leadership uncertainties being resolved and a step down in global financial market/emerging market volatility. Business confidence rose 4 points to +5, more than unwinding the August decline. Business conditions was steady at an above-average +9 index points in September, employment then finally improving, turning positive to the highest level since mid-2001; trading conditions and profitability eased back.

For housing finance, the market will most interested in the investment lending figures and whether they continue to show further moderation. Headline owner occupied lending approval volumes are expected to be steady to a little higher (NAB +0.8%).

The Australian data is followed at 1230 by China’s CPI/PPI October numbers, though these aren’t expected to be especially market moving with inflation subdued and not presenting any impediment to further Chinese economic policy easing.

There is second tier industrial production numbers out of Europe tonight, with the ECB’s Nouy and Couere both speaking. In the US, some interest in the NFIB small business optimism index that’s expected to tick a little higher from 96.1 to 96.5 in October, continuing its recovery from its June lows. The Bank of Canada’s Wilkins is making some introductory remarks at an event in Toronto (so not a big set piece speech), while the Bank of England’s Deputy Governor John Cunliffe speaking.

Overnight

Equities lose some grip: Eurostoxx 600 -1.1%, Dax -1.6%, CAC -1.5%, FTSE -0.9%. Dow -205 points to 17,706, -1.1%, S&P 500 -1.1%, Nasdaq -1.2%, VIX 16.81 +17.3%. Shanghai +1.6%, Mumbai +1.6%, Nikkei 225 -1.2% and ASX 200 -1.8%; ASX SPI futures this morning -1.2%. US bond yields: 2s at 0.88% (0), 10s at 2.35% (+2). WTI oil at $43.95 (-0.8%), Brent at $47.21 (-0.4%), Malaysian Tapis (yesterday) $47.07 (-1.0%). Gold at $1089.80/oz (+0.2%). Base metals: LME copper -0.5%, nickel -0.5%, aluminium -0.7%. Iron ore $48.2/t +0.1% Chinese steel rebar futures +0.1%. Soft commodities spot futures: wheat -3.8%, sugar -3.3%, cotton +0.4%, coffee 0.0%. Euro CO2 emissions price (Dec 15) -1.1%. The AUD/USD’s range overnight 0.7040-0.7070; indicative range today 0.7015-0.7080; the AUD/USD is 0.7050 now
EC Sentix Investor Confidence Survey (Nov) 15.1 (L: 11.7; E: 13.1); Canadian housing starts (Oct) 198.1K (L: 230.7K; E: 200K); US Fed’s Labour Market Conditions Index Change (Oct) 1.6 (L: 0.0; E: 0.9)

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• Markets Today: 10 November 2015 (PDF,335 KB)

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