In international macroeconomic news, the Organisation for Economic Co-operation and Development (OECD) trimmed its estimate for global growth to 2.9% from the 3.0% projection it made in September, while trade growth is forecast to be just 2.0%.
By Peter Martin
Monday, November 9, 2015
The OECD warned that trade had diminished to levels close to those ‘associated with global recession’, with China’s slowing economy being seen as one of the root causes. China has taken further action to stimulate its economy, cutting its benchmark interest rates last month, and the OECD does anticipate growth accelerating next year.
The weaker growth forecast from the OECD has undermined sentiment on Wall Street this morning and contributed to substantial falls in early trading. Shortly after the opening bell in New York, the Dow Jones was down 130 points or 0.73%, while the S&P 500 Index slid 0.58% to 2087.0.
The Loonie gave back some of its gains against the US dollar on Monday morning after data showed Canadian housing starts fell back last month from the pace of construction seen in September. October’s starts eased to an annualized rate of 198,065 units, down from 231,304 in the month prior (revised slightly firmer than the 230,701 originally reported for September). October’s result was just slightly lower than expected, with softness apparent in urban areas, while rural starts actually moved higher. This apparent loss of momentum in October bucks the overall trend, with the six-month moving average sitting comfortably above 200,000. USD/CAD drifted higher after the release of the data, rising to 1.3283, still down 0.16% on the day, having been as low as 1.3245 earlier in the session.
It is otherwise a very quiet start to the week in terms of economic news, and it is only on Friday that we have a busy schedule of data releases, when we will see October’s retail sales figures (growth of 0.3% is expected) and the preliminary reading of the University of Michigan’s index of consumer sentiment (an increase to 92.0 is expected). The latter will be particularly interesting, given the extremely rosy picture of the labor market that we saw on Friday with the bumper non-farm payrolls number for October; such solid employment conditions, with strong jobs growth and rising hourly earnings, would normally suggest a boost to how good consumers are feeling. Consumer spirits are important because they correlate well with consumer spending, as one might expect, which is a major driver of US economic growth.
Also closely in focus this week will be speeches from Fed officials; Friday’s strong jobs report has lifted expectations of a rate hike at next month’s FOMC meeting and investors will be looking for any clues to confirm or deny this expectancy. Eric Rosengren, President of the Boston Fed, speaks on Monday, while a number of key Fed figures speak on Thursday, including Fed Chair Janet Yellen, Vice Chair William Dudley and voting members Charles Evans, Jeffrey Lacker and Stanley Fischer.
This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.