Market update: Brutal numbers from Caterpillar feed the rally, Forint weaker after the MNB warning

by Mihály Tatár

Good Morning!

• With the optimism reinforced by the brutal Caterpillar results (the world’s largest machinery maker, used as a global growth indicator by economists, reported the highest retail sales since 2012, and increased its revenue forecast for the third time to a whopping 44 billion USD for 2017), stocks kept crawling higher (SPX +0.16%, Dow +0.72%, DAX +0.08%, Nikkei +0.08%, Shanghai +0.25%). The main action, however, has been in bond markets: The US 10Y yield spiked to 2.42% – the highest in six months, this is a very important level which is closely watched by the largest investment funds -, and Eurozone yields also walked higher (German 10Y yield 0.48%, happy are those who are protected) dragged along by the US bond market and in anticipation of the ECB meeting tomorrow. The Hungarian Central Bank (MNB) refrained from changing monetary conditions, but it warned again of more easing if necessary – this was of little surprise, given that if the ECB tightens, it means automatically a Hungarian easing -, and traders got the message, pushing the EURHUF from 308 to 310.

• Oil prices inched higher (WTI 52.40, Brent 58.40 USD), mostly on the trader sentiment turning bullish on oil economics as the news from Iraq were a mixed bag: Shite militias have launched a new operation against the Kurds (pushing towards key border crossings to Turkey) but the Kurdistan Regional Governmont blinking for now, saying its prepared to ’freeze’ the result of the indepedence referendum (the US pressure must be enormous on both sides – Tillerson just left Baghdad – but Iran couldn’t care less).

• Things keep going South for the Democratic party: In a bombshell report, the Washington Post (not a newspaper known for liking Trump, mind you) alleged that the Clinton family and the Democratic National Comittee funded the infamous Trump-dossier. (If you remember, the one on which all the Russian-related accusations and the Mueller-investigation were based on). This resulted in Democrats distancing themselves from Clinton and the DNC faster than Hollywood companies from Weinstein two weeks ago, and the scandal is far from over.

• While it received very little media attention, it’s worth mentioning that the autonomy referendums in Italy (in Lombardia and Veneto) both resulted in Catalan-style results (90% supporting more indepedence). These referendums were not binding, but Italian bloggers call the results ’Garibaldi’s worst nightmare’, and they show that next year’s Italian election will be interesting.

Have a nice day,

Mihály

If you liked the post, follow Barrelperday on Facebook!

Or subscribe to our Twitter feed or Newsletter