Intraday Market Thoughts

Clock Ticking on Crisis Politics, Tankan Up Next

by Adam Button
Sep 30, 2013 23:15

Politicians in the US, Italy and Japan are dominating as a new quarter gets underway. The third quarter wrapped up with NZD and GBP as the best performers and USD and JPY lagging. Aside from the political risks, there are major risks from economic data in coming hours with the Japanese Tankan survey, jobs data and China's official manufacturing PMI.

The first US government shutdown in 17 years appears highly likely at this point. The midnight ET deadline is a few hours away and both sides are refusing to budge on Obamacare. Midway through US trading there was some optimism about a temporary funding extension but it faded.

Markets erased some of the early moves but that may have been more due to quarter-end flows rather than a significant change in fundamentals.

In Italy there is some hope as members of Berlusconi's PDL party threatened to break away. He strictly controls his party so dissent is unusual. Reports from a closed door meeting later in the day outlined his plan to support some temporary measures and then force an election.

In Japan, the government announced the planned VAT increase will proceed but there has been no definitive word on long-rumored corporate tax cuts to help offset the effects. The finance ministry is opposed to cuts but most other politicians favor them.

All the assessments in Japan could change with the quarterly Tankan survey at 2350 GMT. This major economic data point steers Japanese policy and will be closely watched by the BOJ and politicians. The consensus estimate for large manufacturers is a rise to +7 from +4 and small manufacturers to -12 from -14. Capex is forecast to rise 6.0%.

At 0100 GMT, China releases its official PMI. Yesterday's final reading from HSBC was revised down significantly so the market may be overly optimistic with a forecast for 51.6 compared to 51.0 previously.

Act Exp Prev GMT
PMI Manufacturing
52.5 52.2 52.2 Sep 29 23:13
PMI Manufacturing
52.5 52.2 Sep 29 23:15
Chicago PMI (SEP)
55.7 54.0 53.0 Sep 30 13:45
Markit Manufacturing PMI (OCT)
52.8 Oct 01 12:58
ISM Manufacturing PMI (SEP)
55.0 55.7 Oct 01 14:00
50.2 51.2 51.2 Sep 30 1:45
51.5 51.0 Oct 01 1:00
Markit PMI Manufacturing (SEP)
51.0 51.3 Oct 01 7:43
Tankan Large Manufacturing Index (Q3)
7 4 Sep 30 23:50
Tankan Large Manufacturing Outlook (Q3)
10 10 Sep 30 23:50
Tankan Non - Manufacturing Index (Q3)
14 12 Sep 30 23:50
Tankan Non - Manufacturing Outlook (Q3)
15 12 Sep 30 23:50

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