This week’s economic landscape brought Europe back in the news as ECB at their monthly press conference announced the “OMT” (Outright Monetary Transactions), which looks to have gained market approval risk assets in the from of stocks and peripheral bond markets surged since the announcement. The ECB has announced unlimited but sterilized bond buys of debt with 0-3 year maturities and only on countries who have requested financial assistance from the EU. Now markets will turn their attention to Spain and Italy to see if they request EU financial assistance.
In the US the macro data including ADP, initial jobless claims and ISM non-manufacturing heightened expectations ahead of this coming weeks FOMC decision as markets are anticipating QE3 from the Fed. The poor Non Farm payrolls data of only 96k verses a market forecast of 123k looks to be the re-enforcer that QE3 is coming to a store near you on September 13.
THE WEEK AHEAD
Monday: China (Tentative) Trade Balance, EUR Sentix Investor Confidence
Tuesday: USD Trade Balance
Wednesday: EUR Italian IP, EUR German Constitutional Court Ruling (Tentative), EUR Industrial Production, USD Crude Inventories, USD 10 year Bond Auction
Thursday: ***FOMC Statement, Fed Funds Rate decision, EUR Italian 10 yr Bond Auction, USD PPI, USD Unemployment Claims, FOMC Projections, FOMC Press conference, USD Budget Balance
Friday: EUR CPI, EUR Core CPI, USD Core CPI, USD Core Retail Sales, USD Retail Sales, USD Prelim UoM Consumer Sentiment
Saturday: Eurogroup Meetings