NETHERLANDS: Scout Continues Meetings As VVD Rules Out Coalition w/GL-PvdA
Nov-06 16:14
Scout and former deputy PM Wouter Koolmees has held meetings with the leaders of eight minor parties today as he continues to gauge potential options for a coalition gov't following the 29 October general election. Having met with the leaders of the seven largest parties in the House of Representatives on 5 Nov, Koolmees could be in a position by 7 Nov to offer an initial assessment of what coalition options are on the table.
- Initial headlines imply that a crucial role will be played by the liberal conservative People's Party for Freedom and Democracy (VVD), the third-largest party in parliament. The clearest route to a majoritty gov't is a 'broad coalition' involving the VVD, liberal progressive Democrats 66, centre-left GreenLeft-Labour Party (GL-PvdA) and the centrist Christian Democratic Appeal (CDA).
- However, after meeting with Koolmees, VVD leader Dilan Yesilgöz reiterated her pre-election stance that her party would not sit in gov't with the GL-PvdA, saying "There is not a single issue where we share the same view on the problem or the solution".
- She advocates for a centre-right coalition that replaces the GL-PvdA with the fiscal conservative JA21, despite the fact that this combination would fall one seat short of a majority. D66 leader and presumptive next PM, Rob Jetten, favours the 'broad coalition' mentioned above.
- Of the minor parties, only the pensioners' interest 50 Plus (holding two seats) has indicated any notable interest in joining coalition talks.
- With none of the major parties willing to bend at present, lengthy coalition talks are a likely scenario.
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FOREX: NZD Slides Into RBNZ Decision, BoJ Hike Patterns in Focus
Oct-07 16:12
- Through the London close JPY printing fresh pullback lows, helping trigger a new alltime high for EURJPY for a second session at 176.36. The JPY leg remains dominant for now, and Takaichi's ability to quell concern among junior coalition partners should prove key to any near-term JPY bounce
and challenge to the JPY weakening bias. - BoJ rate hike timing should also prove key here: the fading odds for an October hike have worked against JPY near-term, but more assertive messaging
for a December hike may mean JPY weakness is limited here on out. We flagged earlier today the rising risk of a correction lower in JPY
crosses, which now screen overbought in many crosses on the 14-day RSI for the first time since mid-September. - The medium-term run higher in gold has continued, helping spot to new record highs of 3985.7 (although in futures space, COMEX gold has now shown above $4,000 for the first time), but the strength in gold looks pretty isolated: silver, oil prices and base metals are all seen lower, which may be limiting the bounce off lows for AUD/USD, which is yet to bounce back above 0.6600. NZD remains the underperformer into the RBNZ rate decision, and with 36bps of easing priced for Wednesday's meeting and a cumulative 63bps by November, markets may be erring in favour of a more sizeable rate cut this week.
- A return lower for NZD would re-open upside in AUD/NZD through to 1.1355-67 resistance, clearance above which returns focus to the bull trigger and cycle high at 1.1418.
- Despite a strong start to Tuesday trade, equity futures slipped sharply following the opening bell, opening a decent gap with the alltime highs posted across a number of markets in recent weeks. Small cap names underperformed, evident in the Russell 2000 slipping faster than the S&P 500. The government shutdown extended into a 7th day, and a lack of breakthrough by the end of this week will begin to prompt furloughed workers to miss paycheques, adding pressure to lawmakers to come to a resolution. House Dem Leader Jeffries painted a bleak picture of the hopes of near-term talks, suggesting there remains a very large gap between lawmakers on resolving the government shutdown - he noted a proposal to extend ACA credits for one year as "laughable" and unacceptable.
- German industrial production data is the data highlight Wednesday, while the FOMC minutes are set to follow, providing the FOMC's latest views on policy ahead of the government shutdown from one week ago. Several central bank speakers are due, including ECB's Escriva, Muller & Elderson, BoE's Pill and Fed's Musalem, Barr & Kashkari.
LOOK AHEAD: Wednesday Data Calendar: September FOMC Minutes, Fed Speak, 10Y R/O
Oct-07 16:11
- US Data/Speaker Calendar (prior, estimate)
- 10/08 0700 MBA Mortgage Applications
- 10/08 0920 StL Fed Musalem welcome remarks
- 10/08 0930 Fed Gov Barr Community Banking Research Conf speech
- 10/08 1130 US Tsy $69B 17W bill auction
- 10/08 1300 US Tsy $39B 10Y Note auction re-open (91282CNT4)
- 10/08 1400 FOMC Meeting Minutes
- 10/08 1515 MN Fed Kashkari Center for Indian Country Development
- 10/08 1630 MN Fed Kashkari fireside chat with Senator Tina Smith
- 10/08 1745 Fed Gov Barr on community development
- Source: Bloomberg Finance L.P. / MNI
FED: US TSY TO SELL $95.000 BLN 8W BILL OCT 09, SETTLE OCT 14
Oct-07 16:05
- US TSY TO SELL $95.000 BLN 8W BILL OCT 09, SETTLE OCT 14
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