Talking Points:
- Markets settled and rebound from the slump that followed the first Presidential debate
- Top event risk for the coming session is a range of central bank speech with particular concentration for the Fed
- OPEC is heading into the third day of its informal meeting and there are no signs of a supply deal
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Event risk continues to stuff the headlines, but the markets remain immune to the dire interpretations given through the ticker. The first US Presidential debate drew a record audience - casual viewers and traders - but the implications for markets are not immediately tangible. A rebound for the S&P 500 and other risk metrics from an overnight dip notably keeps us comfortably in the middle of the range set up with the big September 9th move. We are closing in on the end of September, and it is clear we are trailing the seasonal norm for volatility and risk performance. That is frustrating for those that want more productive swings for trading opportunity or to supplement lackluster yield.
Meanwhile, the Dollar found a little more motivation this past session from the Conference Board's consumer sentiment survey. The September confidence reading was the strongest in 9 years with key components showing comparable improvements. That is an encouraging read from a crucial aspect of the economy that in turn can direct monetary policy. Rate speculation however continues to fade with the Fed Funds futures pricing in a meager 15 percent probability of a hike in November - and now less than a 50 percent chance of a move by December. Ahead, the monetary policy speculation will be stoked by a range of Fed speakers. On the docket are Chairwoman Yellen, Evans, Bullard, Mester and George. This represents members that are crucial to the larger group, those with the most extreme views and one that is protesting forecasts. However, this may do more to maintain range than produce a trend.
Outside of the Dollar's listings, the economic docket will host ECB Draghi testimony and BoE Shafik remarks; but they are less likely to motivate the Euro or Pound respectively. Brexit concerns still provides an active fundamental wind, but its potential is stronger for retracing the discount when surveys and data allow it. In the commodity world, the OPEC meeting its entering its third and final day. The members seem no closer to an agreement on supply caps and oil is still sitting on a considerable premium built on speculation of a supply-demand rebalance. We discuss all of this market developments in today's Trading Video.
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