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The weekly Reports & Events analysis that is part of ITI’s Institutional Financials Review is now posted on the ProTrader's Blog as well. It is only a small part of ITI’s research offerings, and is normally only available by subscription. |
Reports & Events (Highlights)
2008 November 10 (Monday)
The early days of Obama team selection certainly leave room for some erratic market reactions in addition to all of the other important reports and events this week. It is one of the most major US debt offering weeks in recent memory, and also includes important central bank reports, economic data and no small number of speeches.
While an Obama victory was discounted, his team selection will now be critical.
That is especially so in light of abysmal economic data and forecasts immediately weighing on the equity markets once again after the pre-election euphoria. If he can announce the nomination of a really credible Treasury Secretary this week, it might even assist the DJIA in clawing its way back above the near-term resistance in the 9,000 area. While that would very likely still only be a temporary recovery to no better than the critical 9,700-10,000 resistance, it would forestall an immediate retest of the important lower support in the 8,200 area, or a violation of the 7,882 trading low from early last month. If his pick for that office is seen as deficient, it could have an immediate negative impact on equities. And as opposed to the typical "haven" effect for the debt markets during any equities weakness, the long-dated government bonds reaction to a poor choice could be highly problematic as well.
The major central bank influence is driven by significant report releases this week.
Those begin with Monday's Reserve Bank of Australia Quarterly Monetary Policy Statement prior to markets in the rest of the world even opening up for the week, and continue with the Bank of England Quarterly Inflation Report, not so much for the inflation indications but rather any discussion of their obviously changed view of the economy after last Thursday's highly aggressive easing. Those finish with Thursday's ECB Monthly Bulletin that will also be an interesting read in light of their seemingly still tentative approach to the need for further extensive accommodation to offset burgeoning economic weakness.
There are also influences from key speeches both early and later in the week.
The only influence from the US on Monday will be a speech by the Treasury's Kashkari on the TARP Program, followed by plenty of Fed-speak from midweek onward. That culminates in a combined speaking appearance by Chairman Bernanke and President Trichet from an ECB conference in Frankfurt during the early US market hours on Friday morning.
But among the most telling influences may be major US government debt auctions.
While there will be other international bonds auctioned, more so than at any time in recent memory the US government bond auctions are extremely heavy into the end of this week. Thursday sees $20 billion of 10-year T-notes, with Friday wrapping up the offerings with an $8 billion auction of 30-year T-notes. Along with concerns about massive liquidity infusions consistently provided by the US Treasury and Fed, this may be part of the reason the T-note continues to lag its European counterparts on rallies; and the success or lack of it in placing the major offerings late this week is going to be very interesting. If indeed the US long dated government bonds get into trouble, it may perniciously spill over into stocks. Yet, as we have projected since mid-August, that would tend to reinforce the relative strength in European bond markets and further weaken the US long ends on ‘country’ spreads against them.
There are some US market closures in observance of Tuesday’s Veterans Day holiday.
While the equity markets trade normal hours throughout the week, floor trading in the interest rate and foreign exchange instruments at the CME Group will be closing early on Monday at 12:00 CST (13:00 EST; 18:00 GMT.) That trading will also be closed all day on Tuesday.
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