Thursday, October 2, 2014

ECB day today

•     Eurozone PMIs are weak
–    Eurozone overall PMI revised down as new orders contract for the first time in a year
–    German manufacturing PMI slips into contractionary territory
•     US ISM disappoints, although it remains highest in the world
–    Auto sales also slipped in Sep, following the sharp rise in August
–    US stocks, bond yields fell sharply, as did Fed funds expectations
–    USD fell vs most currencies
•     Market reaction seems overdone to me; I expect it to reverse
•     ECB day today
–    Draghi to announce details of ECB’s asset-backed security purchase program
–    How much, what kind of collateral and what ratings they will buy are keys
–    Will they require government guarantees to buy riskier ABS?
–    Market wants to know if they are willing to buy sovereign bonds if necessary
•     Today:
–    Eurozone: PPI for August
–    UK:  construction PMI for Sept expected to decline

–    US: factory orders for August, initial jobless claims

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