Uncertainty remains the order of the day for investors as they attempt to sift meaningful data from noise. Unfortunately, the geopolitical and global policy setup, ranging from U.S. military strategy in Syria to Scotland’s independence vote, is causing not just noise but a proverbial cacophony. In the spotlight today will be European Central Bank President Mario Draghi’s dinner keynote speech at the Eurofi Banking Conference in Milan, which will prompt investors to try to parse any clues to the bank’s policy course.
RBS to withdraw from Scotland in case of independence. The Royal Bank of Scotland released a statement today confirming that the bank will relocate its headquarters to London from Edinburgh in the event that Scotland’s September 18 independence referendum results in secession from the U.K. Edinburgh is the second-largest center for fund management in the U.K. and the fourth-largest in Europe in terms of assets.
German consumer prices unchanged. Final August consumer price index data released today by Germany’s Federal Statistics Office registered at 0.8 percent year-over-year, unchanged from the initial flash reading. While some activity measures in the European Union’s largest economy have shown signs of improvement in recent months, a fear of deflationary pressure continues to weigh on the entire region. With ECB policy still pegged to employment as well as an inflation target, the cost of goods at the cash register in Germany remains a central focus for investors.
Inflation slows down in China. CPI data released by the National Bureau of Statistics in Beijing today indicated an easing of price pressures in August, with the headline index registering a sequential contraction to 2 percent year-over-year, compared to 2.3 percent in July. Food prices, a politically sensitive subject, saw moderate increases of 3 percent year-over-year versus 3.6 percent in July. These readings were below consensus forecasts and stoke fresh concerns about slack demand in the nation, as well as speculation on possible further stimulus measures by the People’s Bank of China (PBOC).
Unemployment Down Under is down. Fresh data released by the Australian Bureau of Statistics indicated a record surge in total new jobs created in August, driving the country’s headline unemployment rate from a record 6.4 percent to 6.1 percent. Many of the 121,000 new positions were for part-time workers, added under a new calculation method by the bureau, giving way to skepticism among investors in the nation.
U.S. jobless claims expected to show improvement. Weekly initial jobless claims data, scheduled for release at 8:30 this morning U.S. Eastern time, are expected to register marginal improvement. Consensus forecasts call for 300,000 new job seekers, compared to 302,000 in the previous period. This would continue a trend over the past several weeks of relatively flat readings at low levels. Despite improvement, recent remarks by some members of the Federal Market Open Committee have made it clear that the structural nature of employment is as important to Federal Reserve policy as is headline job data, as labor force participation remains well below long-term historical averages.
Abe and Kuroda confer on monetary policy. In a meeting with Japanese Prime Minister Shinzo Abe today, Bank of Japan governor Haruhiko Kuroda reiterated the central bank’s commitment to pursue aggressive quantitative easing measures. With a recent loss of momentum in primary economic indicators, the prospect of a fresh increase in sales tax levels has led to speculation that the Bank of Japan will increase its intervention levels in order to soften the blow.
