We just received BOE Bank Stress Test Results and Financial Stability Report. (Use links to learn more). Later today we get more out of the UK when BOE Governor Carney speaks at a press about the reports, followed by the UK Manufacturing PMI.
Current Market Sentiment:
Yesterday’s NY session was lacking of any high impact data events, however we did see the Chicago PMI and US Pending Home sales prints, both of which left something to be desired. The Chicago PMI fell back into contraction at 48.7 in November after surging into expansion at 56.2 in October, continuing the roller coaster pattern with prior readings at 48.7 in September and November, and 54.4 in August. Pending Home sales came in at 0.2% missing expectations of 1.6%. Sales of existing homes have been soft and are not likely to pick up in the next few months based on this poor showing. Overall the USD (DXY) was little changed on the session as we await more significant data later this week.
During Asia Australian data came in mixed with building approvals beating expectations at 3.9% versus the consensus -2.4%, and the current account deficit narrowing, but less than expected. This had little effect on the AUD ahead of the RBA rate decision and statement where, as expected, the RBA left rates unchanged at 2.00%, and did very little to change any language in the statement. The message was basically the same, the RBA sees signs of improvement in the non-mining economy, but accepts that with inflation low, there is scope to lower interest rates further in the future. There was no jawboning the AUD lower, and it said only that the currency “is adjusting to the significant declines in key commodity prices.”
Chinese Manufacturing PMI’s came in within expectations. Markit November manufacturing PMI reading was 48.6, up slightly from 48.3 in October. The manufacturing sector has now worsened in each of the past nine months. However, the latest deterioration was the weakest seen since June. The CFLP manufacturing PMI contracted for a fourth consecutive month in November. The print was 49.6, down from October’s 49.8, which is the lowest reading since August. Asian equities traded mostly positive through the session, not showing any risk averse sentiment.