“What Traders are Watching”
MONTH END– Last day of the Month today, and a Big Mutual Fund Year-End date. Don’t think we will see any “Window Dressing” (usually occurs into Dec31), but we may see some of these big “Tax Loss” Candidates see relief from recent selling pressure.
The Fed’s preferred measure of inflation is due later[wsj.com] Monday. Rising inflation and rising yields could undermine the relative value case for stocks, with the correlation between bond and equity prices now positive – Economic circumstances and attitudes of policy makers[wsj.com] have shifted in the past year in ways that suggest the likeliest path of inflation is up, not down. Data released Friday showed that core inflation, which excludes food and energy, reached a two-year high of 1.7% in the third quarter, according to the Fed’s preferred measure. Other data found stirrings of wage acceleration – Global Yields are modestly lower this AM
Japan’s industrial output stalled in September in a worrying sign[asia.nikkei.com] that the economy, already struggling to mount a sure-footed recovery, may be losing some momentum due to weak consumer spending and exports – Separate data showed retail sales fell more than expected in September from a year ago, further evidence that private consumption remains a drag on growth. The yen is slowly coming down from its lofty heights as markets grow more conscious of interest rates gaps between Japan and the rest of the world, giving a lift to the Japanese economy. While long-term interest rates are rising in the U.S. and Europe, those in Japan are pegged at zero.