S&P 500 Fundamental Forecast – September 13, 2016

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Published: Sep 12, 2016, 11:32 GMT+00:00

The S&P 500 took a big hit late last week as more and more Fed speakers were in favor of a rate increase at the meeting next week. The US dollar

S&P 500 Fundamental Forecast – September 13, 2016

The S&P 500 took a big hit late last week as more and more Fed speakers were in favor of a rate increase at the meeting next week. The US dollar rallied and US equities tumbled. The index is trading at 2127.81 down by over 54 points in futures trading. Some Fed members have been trying to convince markets that the September meeting would be “live” for a hike, even though futures: only imply a one-in-four chance of a move.

No less than three Fed officials are expected to speak later on Monday, including board member and noted dove Lael Brainard. Any hint of hawkishness would likely further pressure bonds and equities. “Market participants are wondering if maybe [Brainard] is being wheeled out to give the market one last warning of a rate hike at next week’s meeting,” said head of research at broker FXPRIMUS.

“The thinking is that if someone as dovish as she is starts talking like a hawk, people will notice. Her speech will be closely examined.”

The case for raising U.S. interest rates has strengthened in recent months, a top Federal Reserve official said on Friday, but long-term headwinds to economic growth mean the central bank will raise rates only very slowly. U.S. wholesale inventories were unchanged in July as previously reported and sales recorded their biggest drop in six months, suggesting a modest boost to third-quarter economic growth from inventory investment.

Traders were unsure how the BOJ would try to steepen the yield curve if it goes down that path at a policy review later this month, but markets are worried that tapering of its buying in long-dated bonds could be among the options.

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Upcoming Economic Events that you should be monitoring:

September 13, 2016

CNY	FDI – Foreign Direct Investment (YTD) Y	2	4.3
AUD	RBA Assistant Governor Kent Speech	2
CNY	Retail Sales Y	2	10.2	10.3
CNY	Industrial Production Y	2	6	6.1
EUR	Wholesale Price Index M	2	0.2
EUR	Wholesale Price Index Y	2	-1.4
EUR	Consumer Price Index Y	2	0.4	0.4
EUR	Index of Consumer Prices M	2	-0.1	-0.1
EUR	Index of Consumer Prices Y	2	0.3	0.3
EUR	Consumer Price Index M	2	0.1	0
GBP	Producer Price Index – Input M	2	3.3	0.5
GBP	Producer Price Index – Input Y	2	4.3	8.1
GBP	PPI Core Output Y	2	1	1.3
GBP	Producer Price Index – Output M	2	0.3	0.3
GBP	Producer Price Index – Output Y	2	0.3	1.1
GBP	PPI Core Output M	2	0.4	0.2
GBP	Consumer Price Index M	2	-0.1	0.4
GBP	Consumer Price Index Y	3	0.6	0.7
GBP	Core Consumer Price Index Y	3	1.3	1.4
EUR	ECB President Draghi’s Speech	3
EUR	ZEW Survey – Economic Sentiment	3	4.6	6.7
EUR	ZEW Survey – Current Situation	2	57.6	56
EUR	ZEW Survey – Economic Sentiment	2	0.5	2.5
USD	10-Year Note Auction	2	1.503
USD	Monthly Budget Statement	2	-113

Government Bond Auctions

Date Time Country Auction

Sep 13 11:00 Netherlands Eur 2-3bn 0% Jan 2022 DSL

Sep 13 11:10 Italy Holds bond auction

Sep 14 11:05 Norway Holds bond auction

Sep 14 11:30 UK 0.125% 2046 I/L Gilt

Sep 14 11:30 Germany Eur 1bn 2.5% Jul 2044 Bund

Sep 15 10:30 Spain Holds bond auction

Sep 15 11:03 Sweden Holds I/L bond auction

Sep 15 11:50 France Holds bond auction

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