Daily Brief

War of the Words

Dialogue of the deaf

Those who stayed awake to watch the presidential debate overnight must be regretting the wasted hours they will never get back. It was an unedifying contest, with no clear winner, though the Democrat contender was judged to have had the edge.

The dollar emerged from the 90-minute exchange with few bruises in comparison to the debate debacle. However why the greenback behaved in this way remains unclear, whether it was because the market-friendly Trump came away as the loser or because he said of the election “this will not end well”. Since little was expected from the debate it can hardly be described as disappointing. It did more to highlight the two candidates’ shortcomings than it did to showcase a potentially great national leader.

The dollar is an average of 0.2% higher on the day but that is not to say much, as it is down by half a cent against the euro and just a fifth of a cent higher against sterling. The CHF, AUD, NZD, SEK and NOK all did better.


Confidence varies

Confidence measures, published on Tuesday, varied across the Atlantic. In Europe they were generally steady or slightly higher on the month, in the States consumers were going for it and in New Zealand business confidence softened. German inflation became more negative and US house prices continued their upward push.

The various EC indices of Eurozone confidence – individual and corporate – had a positive tilt. Consumer confidence was a point higher at -13.9 and industrial confidence improved by more than that to -11.1. Even so, both were still well below the trend of the last five years. America’s Conference Board was more upbeat, rising 15.5 points to 101.8, but still remains below pre-pandemic levels. In New Zealand, business confidence is “hanging in there” at -28.5% according to ANZ’s monthly Business Outlook.

Inflation in Germany backed further into the negative zone at -0.4%, its lowest level since February 2015. In France, the equivalent HICP inflation measure was 0%, the lowest since May 2016. In the United States, S&P’s Case-Shiller house price index went up by 3.9% in July, continuing an eight-year run of monthly increases.


Information overload

The last day of the month began with a veritable tsunami of ecostats from around the world. Ahead of London’s opening the most notable were the Chinese PMIs and confirmation that Britain’s economy tanked by 19.8% in the second quarter.

CFLP’s purchasing managers’ indices for Chinese manufacturing (55.9) and services (51.5) were both half a point or more higher on the month while Caixin’s manufacturing PMI was a millimetre lower at 53.0. A generous half-dozen UK ecostats showed business investment falling 26.5%, - actually less than forecast – in Q2 and house prices rising 0.9% in September.

Looking down the day’s remaining agenda, the highlights this morning are German retail sales and unemployment, Italian inflation, and appearances by ECB President Lagarde and BoE Chief Economist Andy Haldane. After lunch, Canada and the US present their latest GDP numbers, followed by the Chicago PMI and US pending home sales. Australia’s manufacturing PMI comes out tonight.

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