20171102-大华银行-Markets_Overview_5页_283kb

Global Economics & Markets Research Summary (2 Nov 2017)

Core Content

This document provides a detailed overview of global economic and financial market developments as of 2 November 2017, with a focus on key events, monetary policy outlooks, FX movements, equities, US Treasuries, and commodities. It also includes economic data releases, market holidays, and interest rate forecasts.

Main Events & Outcomes

• BOE Policy Decision: Expected to raise the Bank Rate by 25bps to 0.50%, marking the first increase in over a decade.
• Fed Chair Nomination: President Trump is likely to nominate Jerome Powell as the next Fed Chair, though there is a possibility of reappointing Janet Yellen.
• US Tax Bill Delay: The House GOP tax bill was delayed to Thursday (2 Nov) due to challenges in meeting the Thanksgiving deadline.
• G7 Economic Data:
  • Japan: October monetary base increased by 14.5% y/y to JPY476.6 trillion.
  • Thailand: Headline inflation remained at 0.86% y/y, core inflation rose to 0.58% y/y.
  • Indonesia: Headline inflation eased to 3.58% y/y, core inflation increased slightly to 3.07% y/y.
  • Malaysia: Continued contraction in manufacturing PMI at 48.6.
  • China: Caixin PMI for manufacturing remained at 51.0, while official PMI dropped to 51.6.
  • South Korea: Manufacturing PMI declined to 50.2.
  • Vietnam: Manufacturing PMI dropped to 51.6.
  • Taiwan: Manufacturing PMI fell to 53.6.

Key Economic Indicators

FX Market Movements

• USD: Strengthened against major currencies due to reinforced expectations of a December rate hike.
• EUR/USD: Traded to an intraday low of 1.1606 and closed at 1.1619.
• GBP/USD: Depreciated to 1.3241 and ended near 1.3245.
• JPY/USD: Reached an intraday high of 114.28, closing at 114.18.
• AUD/USD: Closed higher at 0.7676.
• NZD/USD: Strengthened to 0.6931, closing at 0.6886.
• SGD/USD: Closed at 1.3603, with SGD NEER expected to trade between 1.0% and 1.5% above the midpoint.
• RMB Midpoint: Predicted to be at 6.6244/USD, 57 pips below 6.6300/USD.

Equities Performance

• US Stocks:
  • DJIA: +0.25% to 23,435.01.
  • S&P 500: +0.16% to 2,579.36.
  • Nasdaq: -0.17% to 6,616.53.
• Asian Equities:
  • Nikkei 225: +1.86%.
  • Hang Seng: +1.23%.
  • KOSPI: +1.31%.
  • Shanghai Composite: +0.08%.
  • Taiwan Weighted Index: +0.12%.
  • STI (Singapore): +0.52%.
  • JCI (Malaysia): +0.54%.
  • SET (Thailand): -0.40%.
  • KLCI (Malaysia): -0.23%.

US Treasuries

• UST Yields:
  • 2-Year: +1.2bps to 1.61%.
  • 5-Year: +0.2bps to 2.02%.
  • 10-Year: -0.7bps to 2.37%.
  • 30-Year: -2.2bps to 2.86%.

Commodities

• Crude Oil:
  • WTI (NYMEX): -0.15% to $54.30.
  • Brent (London): Reached a fresh high of $61.70 but closed at $60.49.
• Gold: +0.54% to $1,277.30, rising despite a stronger USD.
• CRB Index: +0.20% to 187.94.

Market Outlook

• Fed Watch: Probability of a December rate hike is at 98% (CME) and 92.3% (Bloomberg).
• BOE Outlook: Expected to raise rates, with a focus on economic stability and the impact of Brexit on financial services.
• Thailand's Inflation: Expected to rise gradually as domestic demand recovers.
• SGD NEER: Anticipated to trade within 1.3563–1.3630 range.
• Market Holidays:
  • Japan: Culture Day (Nov 3).
  • Thanksgiving (Nov 23).
  • Philippines: Bonifacio Day (Nov 30).
  • Malaysia: Birthday of Prophet Muhammad (Dec 1).
  • Indonesia: Maulid Nabi Muham (Dec 1).
  • Thailand: King's Birthday (Dec 5), Constitution Day (Dec 11).
  • South Korea: Election Day (Dec 20).
  • Christmas Day (Dec 25).

Summary of Key Points

• Monetary Policy:
  • The BOE is expected to raise rates, marking the first increase in over a decade.
  • The Fed's growth outlook was upgraded, reinforcing the likelihood of a December rate hike.
• FX:
  • USD strengthened against most major currencies, including EUR, GBP, and JPY.
  • SGD and THB appreciated against the USD, while PHP declined slightly.
• Equities:
  • US stocks rose modestly, with the DJIA leading the gains.
  • Asian markets generally showed positive performance, with exceptions in some regions.
• Commodities:
  • Crude oil prices declined slightly, while gold prices rose.
• Economic Data:
  • Mixed signals with some positive releases, but concerns over inflation and trade deficits remained.

Conclusion

The week ahead is marked by key central bank decisions, potential Fed Chair announcements, and economic data releases. The markets are closely watching for any shifts in monetary policy and the implications of Trump's potential nomination of Jerome Powell. FX markets are expected to remain volatile, with the USD likely to remain strong, while equities and commodities show mixed performances.