The Federal Reserve are Expected to Raise Interest Rates
The US futures are set to higher open higher as we approach the final quarter and the start of a new month. Investors have started to position themselves ahead of rail of economic data which is due this week. There is no doubt that we have a well-documented recovery in Spain and Italy, but having said that the flickering concerns about these economies are still flashing.
Politicians playing with fragile recovery
It seems like investors have started to contend against the political uncertainty on both sides of the Atlantic. It is not a wise idea for the politicians to play with the fragile recovery and especially the pace that they are playing with, as this could easily derail the recovery. This morning at 5 AM the US government has started to partially shut down some of their operations and the hope is that both the Democrats and the Republicans would come to their senses soon enough to see what the consequences could be on the markets by passing the temporary budget which could let the government run in the meanwhile.
Traders are certainly hoping that wiser heads will prevail in this battle before we approach the debt ceiling dilemma.
Italian 10 Year yield and Leta’s confidence vote
Back in Europe, given that the ministerial resignations caused a ripple effect in the Eurozone over the weekend, the 10 year Italian bond yield eased off yesterday after rumours hit the market that certain members of the Berlusconi’s party may vote against him and stay in the government. But this story certainly has other side which is that the Mr Leta is still going to look for a confidence vote Wednesday to form a coalition
Economics Data- Manufacturing PMI for Spain, Italy and Germany will be in focus
Nevertheless, the economic data in the Europe would be the main focus amid investors. The recent readings of the manufacturing PMI data for Italy and Spain clearly shows an improvement for these countries, but the main concern for the investor is France, and it is expected that this reading could remain too green with the final reading of 49.5.
The Spanish manufacturing PMI for September is expected to come in at 51.6 while the previous reading was 51.1. Similarly the manufacturing PMI data expected for Italy and Germany is 51.1 and 51.3 respectively.
There is no doubt that these readings are very welcoming, but the devil is always in the details, as these readings only tell part of the story, because the unemployment reading for Italy and Spain does paint a very depressing picture.
The UK’s Manufacturing PMI reading could shed some light for Q3 GDP
The future’s for the FTSE 100 are also trading up by almost 0.17% however, the question remains if these gains can remain in a positive territory for the rest of the day. The sterling economy could face pressure later this morning when the economic data- manufacturing PMI will hit the wire. The forecast for this is 57.51 while the previous reading was 57.2.
Investors will look at the state of this data very closely, as the manufacturing PMI data is usually expected to give a strong idea about how good the preliminary Q3 GDP could be.
Currency
The AUD, NZD, EUR, GBP are trending up against the dollar while the DKK,CHF and SEK are trending down against the dollar on an intra day basis.
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