Monday, October 28, 2013

US Market Update: Markets Quiet Ahead of FOMC

***Economic Data***
- (UK) Oct CBI Industrial Reported Sales: 2 v 32e
- (US) Sept Industrial Production M/M: 0.6% v 0.4%e; Capacity Utilization: 78.3% v 78.0%e; Manufacturing Production: 0.1% v 0.3%e
- (US) Sept Pending Home Sales M/M: -5.6% v 0.0%e; Y/Y: +1.1% v +3.5%e
- (US) Oct Dallas Fed Manufacturer Activity: 3.6 v 9.0e

- Trading has been a bit subdued this morning, as investors await the FOMC decision due out on Wednesday. Not too much is expected out of the meeting, with the taper now all but off the table for this time around. As of writing, the DJIA is down 0.17%, the S&P500 is flat and the Nasdaq is down 0.37%.

- The September pending home sales data were not pretty, with big misses seen in both the m/m and y/y figure. The m/m data has been negative for four months in a row. The NAR commented that lower housing affordability are likely responsible for the bulk of reduced contract activity. "In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers' inability to agree on a budget," said the NAR. Homebuilder stocks are in the red following the data, but losses have been fairly mild.

- The Dallas Fed October manufacturing activity index fell to 3.6 from September's 12.8 reading and August's 5.0 level. Every sub-index was equal to or higher than the September report except for new orders, which ground to a halt in the month. The ISM-weighted version of the index rose slightly, from 51.6 to 52.5, but still well below the US September ISM Manufacturing reading of 56.2.

- The dollar saw some strength in the overnight session as pairs consolidated ahead of this week's FOMC meeting. USD/JPY touched 97.80 for the first time in three sessions after dipping into the 96 handle on Friday. Meanwhile EUR/USD dropped slightly, to around 1.3780. Note that oil prices are slightly elevated as Brent rises into the $107 handle on more Libya port troubles. WTI front-month crude has followed Brent higher, to $98.60.

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