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Tuesday, October 13

13th Oct - Bad data sours markets

Previously on MoreLiver’s:

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Lobbyists in Brussels — The social networkPolitico
What the Commission’s meetings with lobbyists reveal about alliances and rivalries in Brussels.

Finnish competitiveness-raising policies and their discontentsEuropp

UK: Back to deflation - we think this is the bottom for now – Danske Bank
Britain’s Inflation Rate Unexpectedly Drops Back Below Zero – BB
UK inflation dips below zero – Nordea

Brainard Drops A Policy BombTim Duy
This is the most exciting speech I have read in forever. Not necessarily for the content. But for the politics. Evans and Kocherlakota are no longer the lunatic fringe. This could be a real game changer that shifts the Fed toward the Evans view of the world, with no rate hike until mid-2016. Brainard muddied further the already murky December waters.

Majors & Scandies: FX forecastNordea
Our general story for the global economy and central banks remains broadly intact, even though there are some downside risks to certain data releases stemming from the earlier oil price decline as well as from EM worries. We think the market is much too pessimistic on the scope for rate hikes from the Bank of England and the Federal Reserve. We leave our forecasts unchanged.

Majors & Scandies: Central bank and rates forecastsNordea
We keep our forecast for the first Fed hike in December despite market pricing putting it further off. US government bonds thus have some potential to sell off, though a dovish Fed should cap yields not too far above the current levels. EUR rates may rise to a lesser extent than its US equivalents but should rise unless the ECB against our expectation increases the monthly asset purchases. We expect more easing from the Riksbank at its October meeting, while Norges Bank may wait for a while.

EM FX: New financial forecastsNordea
EM FX has recovered roughly a quarter of its year-to-date loss in the last three. We believe it is still too early to call the big turnaround and keep forecasts of more weakening on a 3-month horizon. Stability in China, stability in oil prices and getting the first Fed hike out of the way are probably required for a longer-lasting shift in sentiment. EM FX is clearly undervalued at the current levels, though. We have changed our forecasts for the BRL, the ZAR and the Reserve Bank of India.

Morning MoneyBeat AsiaWSJ
U.S. Stocks Rise on Rally in Health, Consumer Shares

Morning MoneyBeat EuropeWSJ
Weak Chinese Data Drags Europe Lower

Morning MoneyBeat USWSJ
Volatility Evaporates From the Market

Danske DailyDanske Bank

Euro rates updateNordea

Mixed Chinese trade data, oil slips, Fed expectations again delayed * UK CPI remains sticky around zero * Oil price makes a nose-dive * German bunds advance

Morning MarketsTF
Asian equities fell on Tuesday after a rout in oil prices on Monday and as mixed Chinese trade data further dashed hopes for an escape from economic slowdown in the world's second-biggest economy.

Daily FX CommentMarc Chandler
Five Drivers of Turn Around Tuesday

Daily ShotTF
China's steeper-than-expected drop in imports in September was an alarming trend to those who rely on exports to the world's second-biggest economy, and market fears around a "hard landing" in China remain elevated. But recession in China remains unlikely due partly to monetary and fiscal stimulus.

Daily Press SummaryOpen Europe
SNP refuse to participate in cross-party ‘In’ campaign as Lord Rose says Brexit would be “a leap into the dark” * Politico: Cameron warned to submit final list of renegotiation objectives by early next month * Germany to extend border controls as Merkel coalition splits over “transit zones” for migrants * European Commission asks Spain to amend its draft 2016 budget * ECB doesn’t need to adopt additional easing measures, says Lithuania’s central banker * Greek government submits to parliament first set of measures needed to unblock bailout cash * EU calls on Russia to stop airstrikes in Syria * Chance of left-wing coalition in Portugal appears to be increasing * EU Trade Commissioner: I do not take my mandate from the European people * EU challenges new Hungarian migration law * EU to lift sanctions on Belarus * Several EU countries move to water down global bank capital rules

Brussels PlaybookPolitico
EU tough on Assad — Cameron cheat sheet

Futures Slump After China Imports Plunge, German Sentiment Crashes, UK Enters Deflation


From the FloorTF
Another outburst of Chinese wobbles – this time inspired by unexpectedly poor import data – sparked a risk-off sentiment shift across Asia overnight that sent regional bourses sharply lower, battered commodity currencies and reignited interest in safe-haven assets such as bonds. Crude oil, too, saw its recovery rally fade away because in addition to Chinese data, Opec's latest monthly report showed output hitting its highest level in over three years.

Kiinan huonot tuontiluvut osoittavat elvytyksen tarpeen * Fedin Lockhart: Kiina-riskien suorat vaikutukset USA:n taloudelle vähäiset * Ruotsin tänään julkaistavat inflaatioluvut painostavat keskuspankkia lisäämään elvytystä * Brent-öljyn hinta laski jälleen 50 dollarin alapuolelle

Ruotsi vie, Suomi vikisee? Sakari Heikkinen