Market Review – Fundamental Perspective 4 October 2017

Markets were relatively subdued yesterday and US equities continued to climb higher closing in positive territory for the 14th time out of the past 17 sessions, whilst USD came under pressure.
President Trump has been presented with a shortlist of nominees for the Fed Chair position by his advisors. The list included Cohn, Warsh, Powell and Yellen. The main contenders, Warsh and Powell are perceived as hawkish and dovish respectively.
The instability in Catalonia continued yesterday after protests were held and the outlook for the region now largely depends on if the Catalonian government declares independence or not.
If independence is declared, it would likely lead to more street clashes with the police and greater volatility in related financial markets.
In the UK, yet another weaker than expected domestic data print, this time in construction PMI which fell to 48.1, dragged GBP lower on the day. Despite construction PMI being a volatile series, the fact that it dropped below 50 for the first time since August last year caused some concern.
Focus today will fall on PM May’s key note speech that will round off the Conservative Party Conference. May is expected to call for unity within her party after recent reports that some members, most notably Boris Johnson, hold a different view on Brexit proceedings.
Fed Chair Yellen will also speak today at a banking conference in St. Louis. Barclays Research expects her to “…reiterate that cumulative progress on the economy so far warrants continued modest tightening of policy, but that that recent weakness in inflation need to be monitored….

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