October 25, 2017 by Lorcan Roche Kelly
Positive data from Europe, cracks in GOP unity in Washington, and a warning on bonds. Here are some of the things people in markets are talking about today.
Third-quarter GDP growth for the U.K. came in at a slightly faster-than-expected 0.4 percent, according to the Office for National Statistics. This positive reading from the final piece of hard data ahead of next week’s Bank of England monetary policy decision gave a boost to the pound which traded at $1.3178. In Germany, the Ifo survey showed business confidence in the country unexpectedly rose to a record high in October. The euro remained little changed after the release as all eyes remain on tomorrow’s ECB gathering.
President Donald Trump, whose love of the Republican Party establishment was always lukewarm at best, is facing increasing criticism from his own side of the aisle. GOP Senator Jeff Flake of Arizona, who is not seeking re-election, yesterday launched a blistering attack on Trump, saying the president’s behavior was “dangerous to democracy.” The increasingly public split in the party could not come at a worse time for Trump as he tries to get a tax-cut plan done by the end of the year.
As the race for the Fed Chair seems to be entering the final stretch, DoubleLine Capital’s Jeffery Gundlach tweeted that the “moment of truth” has come for the U.S. bond bull market. With the yield on 10-year Treasuries trading above the 2.4 percent level that has acted as a high-water mark since May, there is a chance that the bears’ time may finally have come.
Ovenight, the MSCI Asia Pacific Index slipped 0.1 percent, dragged lower by Japanese shares as the Nikkei 225 Stock Average snapped a 16-day rally. In Europe, the Stoxx 600 Index was 0.1 percent higher at 5:45 a.m. Eastern Time as investors sit on their hands ahead of tomorrow’s ECB decision. S&P 500 futures slipped 0.1 percent, the 10-year Treasury yield was at 2.454 percent and gold was lower.
U.S. durable goods orders data for September are released at 8:30 a.m., and data on new home sales come in at 10:00 a.m. The biggest excitement may be north of the border, with the Bank of Canada’s monetary policy decision due at 10:00 a.m. While none of the economists in a Bloomberg survey expect a change in rates, any hints of another hike in December should add to the Canadian dollar’s strong performance this year.