Weekly Reports | Nov 11 2016
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By Greg Peel
Back in The World Before Trump, the market was pricing in around an 80% chance of a Fed rate hike next month, and no further rate hike until, probably, December 2018. A hike would no doubt be off the table however, were Trump to win, given the stock market would crash.
The stock market hasn’t crashed – the bond market has. In the two days post election the US ten-year bond yield has already risen by the 25 basis points the Fed would hike, and that’s from the starting point of 80% already being priced in. Although vague at this point, Trump policies are likely to pick up the stimulus baton on the fiscal front to take the burden off monetary policy.
The Fed could justify a 50bps hike next month. Or at least a rethink its “gradual” approach. It’s a whole new world, this World of Trump.
Do US data now matter? Next week sees numbers for retail sales, inventories, industrial production, inflation, housing sentiment, housing starts and the Empire State and Philly Fed activity indices.
Does China now matter as much? Next week sees a dump of October retail sales, industrial production and fixed asset investment numbers.
Japan and the eurozone both release September quarter GDP results.
In Australia we’ll see the minutes of the November RBA meeting. They’re old hat. We’ll also see the September quarter wage price index, beginning the countdown towards our own GDP result.
And Trump or no Trump, the AGM season will roll on. Indeed, next week is one of the busiest. We’ll also see earnings results from Elders ((ELD)), Oxforex ((OFX)), Graincorp ((GNC)), James Hardie ((JHX)) and AusNet ((AST)).
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