Intraday Market Thoughts

Onto Final UK Q3 GDP, RIsk Appetite Holding

by Patrik Urban
Dec 22, 2011 9:17

UK final Q3 GDP to show 0.5% growth as sterling hits 10 month highs, Italian economy continues to slide with retail sales continuing to fall, Hungary downgraded to Junk and Greek PSI talks in doubt, US Q3 GDP and weekly jobless claims later in US session. Ashrafs Premium longs on oil (Feb contract), CAD have hit targets, while longs in EURUSD are on track.

Todays final UK Q3 GDP due at 9:30 GMT seen confirmed at 0.5%, yet, it is Q4 growth that is the primary concern for the markets, especially following yesterdays BoE minutes showing major concerns with output growth to come up flat. Those BoE minutes suggested the MPC was in no rush to increase the extra 75bn worth of asset purchases. Fears about the stickiness of inflation will see the Bank hold fire on committing any new money to help the economy until the bank has sight of the inflation numbers in January, which should see the effects of this years VAT hike drop out of the figures.

In Europe, 523 banks themselves on ECBs 3 year LTRO, which after an initial pop in the single currency saw the euro slide back. The sheer size of the take-up suggests that while the ECB may have dealt with the funding pinch point, the real problem remains a lack of growth as shown by yesterdays Italian Q3 GDP numbers, which showed a contraction of 0.2%.

ON WEDNESDAYs PREMIUM TRADES show Ashrafs strategy of favouring CAD & oil continues to make up for those unfilled trades. Here are is direct access to those remaining trades

Italian October retail sales edged up 0.1% m/m vs expectations of -0.2% and a revised -0.3%, and -1.5% y/y frpm -1.6%. Markets have yet to await the outcome of a key confidence vote for new PM Mario Monti in the Italian Senate on the latest austerity budget.

Hungary was downgraded to junk status by Standard and Poors while the Greek PSI talks are on the verge of collapse as hedge fund Vega threatened to sue Greece for excessive haircut.

Final US Q3 GDP figures are expected to be confirmed and weekly jobless claims are expected to have increased slightly at 13:30 GMT. The final University of Michigan confidence numbers for December is due at 15:00 GMT.


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