Mental preparations for another onslaught of selling bonds and equities offshore were put on the backburner with markets becalmed overnight.  The USD gave back a little ground – the Bloomberg spot DXY index is down 0.09% – with the AUD/USD remaining overnight in the 0.74s within a 40 point range, smack bang in the middle now at 0.7468.

European equities eased slightly, down 0.09% and the US main board indexes closing mixed, the Dow off 32 points to 18035, down 0.18%, the S&P 500 off 0.06% but the Nasdaq closing higher by 0.36%.

On the commodity front, the biggest mover was oil with WTI down another 2.74% to $43.67 and Brent off 2.36% to $45.99.  (Apart, that is, from met coal that’s up another $10.25/t to $180, partly thanks to local wet weather.) The market was expecting a weekly rise in crude inventories of 2.77mb to be reported by the EIA overnight but a 0.559mb drawdown was reported.  Even so, sentiment around oil looks to be dogged by continued fears of fundamental oversupply.   Tuesday’s report from the EIA of a weakening global demand outlook also weighed.  US energy stocks underperformed on the S&P, down 1.15% as did USD/CAD somewhat that is trading near session highs and notwithstanding another sizeable rise in Teranet/National Bank house prices in August, up 1.5%/11.4%.

Maybe it was the continued softness in oil or maybe the market was taking a breather, but bonds managed to get some support overnight, German 10y bunds down 5bps to 0.02%, US 10y Treasury yields also lower by 3bps to 1.696%.

The RBA’s Guy Debelle (soon to be Deputy Governor) was speaking overnight offshore but not on the market or the economy but on the impending global FX Conduct Code.

The UK labour market report for July/August came and went without any market impact, employment still rising through the July quarter, little change in jobless numbers in August and an unchanged unemployment rate of 4.9% for the three months to July.  Sterling made minimal net gains for the session, ahead of tonight’s UK retail sales and BoE meeting where no change in rates or QE is expected but the market will be alert to any shifting views (more/less gloomy?).

Coming up

It’s lining up as a potentially market moving day here given the meaty market-sensitive releases on both sides of the Tasman this morning with NZ GDP at 8.45 AEST and the August AU Labour Force report at 11.30.

NAB’s forecasts for both are tilted to the top side and somewhat stronger than consensus.  For GDP, our colleagues at BNZ are tipping a gain of 1.2% for the quarter that would see annual growth push up from 2.8% to 3.7%, a tenth of a percent above consensus.  And they warn that annual growth might also get a kick up on a likely upward revision of the initial 0.7% Q1 print.  Should be Kiwi-positive.

Then comes the Australian labour market report for August at 11.30.  NAB looks for 22,000 net new jobs in August, (should be somewhat AUD supportive initially) a similar pace of job creation as in July and slightly stronger than the current market consensus of 15,000. There’s no obvious risk tilt from sample rotation issues but there is likely to be some further flow on from workers hired to complete the Census (as was the case for July).  A 22K print for employment is a little stronger than required to keep the unemployment rate steady; our pick is for the unemployment rate to remain steady at 5.7%.

The Melbourne Institute’s survey of consumer inflationary expectations for September is also out (at 11.00), and while this gets scant attention, the RBA watches inflationary expectations measures closely to help form their forecasts for wages and inflation.  The RBA also release their monthly FX transactions transaction summary and there is the ABS new motor vehicle sales report for August at 11.30.

Tonight sees the BoE and release of UK retail sales for August, skewed two months ago by wet weather and the subsequent return of shoppers last month.  The market is looking for a 0.7% decline in ex-auto sales after the post-wet weather 1.5% rebound in July.  The second vintage of EC CPI for August is also out tonight, coming with the first release of core CPI.  In the US, there is weekly jobless claims, the Philly Fed and Empire State manufacturing surveys for September, PPI, industrial production, and business inventories, so a swathe of data, but whether it’ll be market moving remains to be seen.

Overnight

On global stock markets, the S&P 500 was -0.06%. Bond markets saw US 10-years -2.95bp to 1.70%. In commodities, Brent crude oil -2.34% to $46, gold+0.2% to $1,326, iron ore -0.2% to $55.97. AUD is at 0.747 and the range since yesterday 5pm Sydney time is 0.7453 to 0.7492.

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•  Markets Today: 15 September 2016 (PDF, 83kb)

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