DowJones News
15 Sep, 2021 17:19

DJ Global Forex and Fixed Income Roundup: Market Talk

2021 Dow Jones & Company, Inc.

The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

1319 ET - JPMorgan is cutting its estimate of current quarter growth from 7% to 5%. "The revision reflects a combination of weaker final demand growth and slower inventory accumulation," it says, adding "these in turn are likely the result of, among other potential issues, the delta virus and supply-chain problems, the latter being particularly severe for the motor vehicle sector." JPMorgan says some of that slower growth will be made up, lifting its 4Q GDP projection from 3% to 3.5%. (michael.derby@wsj.com)

1155 ET - Vineyard Wind, the nation's first large-scale offshore wind farm, secured $2.3B in senior debt to finance the construction of its first project, the company said. Its contractors and suppliers will begin work in coming weeks. The project, a joint venture between Avangrid Renewables and Copenhagen Infrastructure Partners, will be located off the coast of Massachusetts. Onshore work will begin this fall and offshore work will begin next year. The project is expected to begin producing electricity in 2023. (katherine.blunt@wsj.com; @katherineblunt)

1136 ET - European markets drop as gains for oil, mining and steel-making stocks fail to offset losses for utility, travel and luxury-goods shares. The Stoxx Europe 600 drops 0.7%, the FTSE 100 retreats 0.1%, the CAC 40 is off 1.1% and the DAX retreats 0.6%. Still, Brent crude hits $76 a barrel, boosting the likes of BP, Eni, Repsol, Royal Dutch Shell and TotalEnergies. Antofagasta, Glencore, Evraz and ArcelorMittal also gain. In contrast, Endesa, Enel, IAG, TUI, Kering and LVMH are among the biggest fallers. Worries about global growth, central-bank tapering and new Delta-variant coronavirus cases seem to be behind the downbeat mood, IG says. (philip.waller@wsj.com)

1053 ET - "We were very bullish on U.S. equities coming into this year, we upgraded our target again after Q1 earnings season...because we felt that we were not only going to get strong earnings growth, but we were gonna get very positive earnings revisions, so forecast upgrades, " says Greg Boutle, US head of equity & derivative strategy at BNP Paribas. But we're "definitely taking a more cautious stance relative to where we were earlier in the year." The earnings momentum is largely behind us, he says, and the US 10-year rates could be higher at the year-end, factors that applied together suggest a not-as-strong tailwind for equities. "We do think we're gonna get positive earnings growth, at least organically next year," he adds "but we think that's pretty fully priced into the markets." (kavita.mokha@wsj.com)

1038 ET - Much of Asia's international flying may not recover to pre-pandemic levels until the end of 2024, given the reliance on Chinese tourism and business traffic, says John Grant at airline data analyst OAG. China will likely phase in its lifting of travel restrictions, and some countries are seeking alternative demand sources, says Grant, with Thailand marketing itself more at Russian vacationers. International capacity across most of Asia remains down 90% from pre-pandemic levels. "The Asia numbers are scary, frankly," says Grant at an industry event. (doug.cameron@wsj.com; @dougcameron)

1032 ET - U.K. government bond yields look low in relation to the risk of rising inflation and the prospect of interest rates rising earlier than anticipated, says Mizuho. "The GBP curve is still generally flatter than we can justify, which we think is premised on a very low neutral Bank rate," analysts at the bank say. After official data earlier showed the annual CPI inflation rate rose 3.2% in August, they see a much greater probability of the Bank of England "not only hiking rates, but also actively selling gilts into the market, than the forwards [rates] currently price." (lorena.ruibal@wsj.com)

1026 ET - The 0.4% rise in U.S. industrial production in August signals that the factory sector is losing steam as the Delta coronavirus variant caused disruptions to global supply chains, Capital Economics' senior U.S. economist Andrew Hunter says. The downward trend is likely to continue in September due to several plant shutdowns because of the shortage of semiconductors and the hit from hurricane Ida, which disrupted oil production, he says. "The slowdown in the pace of global manufacturing activity growth, particularly in China, suggests that the U.S. manufacturing recovery will continue to slow over the next few months," Hunter says. (xavier.fontdegloria@wsj.com)

1006 ET - Canadian existing-home sales declined 0.5% in August, a fifth-consecutive month-over-month drop after a March peak, the Canadian Real Estate Association reports. On an actual, nonadjusted, basis, transactions dropped 14% from a year ago. That being said, CREA said August, 2021 represented the second-best August in history, which indicates real-estate activity remains at elevated levels. "Canadian housing markets appear to be stabilizing somewhere in between pre- and peak-pandemic levels - which is to say, still extremely unbalanced," said CREA economist Shaun Cathcart. CREA's benchmark house-price index, similar to the S&P CoreLogic Case-Shiller gauge, rose 0.9% on a one-month basis and 21.3% on a 12-month basis, to C$736,600. (paul.vieira@wsj.com, @paulvieira)

0949 ET - Brazil's services sector spurred the country's economic growth in July and will continue to spur expansion in coming months, according to Alberto Ramos, an economist at Goldman Sachs in New York. Brazil's central bank said Wednesday its IBC-Br index, a stand-in for GDP, expanded 0.6% in July from June and 5.5% from a year earlier. The figure came in better than expected and showed buoyant services activity, Ramos said. As Brazil's vaccination programs advance, allowing more businesses to reopen, and fiscal stimulus programs boost consumer purchasing power, services to households in particular should continue to recover, Ramos said. Accelerating inflation, and political and policy uncertainty could cap some of that growth, he added. (jeffrey.lewis@wsj.com)

0900 ET - Coinbase, one of the world's largest crytocurrency exchanges, sold $2 billion in high-yield bonds Wednesday, raising $50 million more than initially planned thanks to strong investor demand, Bloomberg reported. Investors placed orders of at least $7 billion, it says, citing a person with knowledge of the matter. Coinbase printed seven- and 10-year bonds at interest rates of 3.375% and 3.625% respectively, both below the initial interest rates at which the deal was fist marketed. (lorena.ruibal@wsj.com)

0857 ET - Prices of goods imported to the U.S. fell 0.3% on month in August after rising 0.4% in July, according to data from the Bureau of Labor Statistics. The decline is the first since October 2020, when prices dropped 0.1%. The reading missed economists' forecasts, which anticipated a 0.2% rise. The August downturn was led by petroleum prices, which fell 2.4% after advancing 2.3% the previous month, the data show. On an annual basis, prices for U.S. imports increased 9% in August, easing from the 10.3% rise registered in July. Decelerating import price inflation confirms that price dynamics will continue normalizing on fading base effects, softer domestic demand, and a steady dollar, Oxford Economics' U.S. economist Mahir Rasheed says. (xavier.fontdegloria@wsj.com)

0856 ET - The Bank of England could delay tightening monetary policy as long as inflation expectations remain contained, says Nomura. "Should they [inflation expectations] remain contained then it would be easier to make the case for holding back policy tightening," says chief UK & euro area economist George Buckley. He sees risks to the bank's view that the BOE may raise interest rates for the first time in February 2023, the risk of another wave of the virus and associated restrictions could still mean the near 40 basis points of tightening assumed by the market over the next year is too aggressive, he adds. (lorena.ruibal@wsj.com)

(END) Dow Jones Newswires

September 15, 2021 13:19 ET (17:19 GMT)


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