Market movers today
After an intense central bank day yesterday, the data calendar is fairly thin today and hence market focus will probably be on absorbing yesterday's policy message from the ECB.
Russia. The central bank (CBR) will release its decision today. While a 25bp cut to 8.25% is widely expected (Bloomberg consensus and Danske Bank), there is a possibility that the CBR could do more and deliver a 50bp cut, or do nothing and keep the key rate unchanged. However, a cautious cut would be well justified, in our view, given that inflation has hit its post-Soviet lowest at 3.0% y/y, falling far below the CBR's target of 4.0% y/y. On the other hand, inflation expectations remain sticky, declining marginally. The CBR has been cautiously hawkish in its inflation comments recently and are not concerned about the high real rates. In its Friday's statement, we expect the CBR to praise economic development, enhancing the need for firmer CPI, anchoring around the target in the long run. We expect the key rate to end up at 8.00% by end-2017.
US. We are due to get the first estimate of Q3 GDP growth today, which is likely to have been affected negatively by the hurricanes, making it more difficult to estimate. While the Atlanta Fed's GDP indicator says growth was 2.7% q/q AR, the New York Fed's indicator says 1.7% q/q. Our estimate is 2.0% q/q AR. Even if we get a weak print, it should be temporary and it would not change our view that the US is in the middle of an expansion. Of interest is also the PCE core number where consensus is looking for 1.3% q/q AR growth, up from 0.9% in Q2.
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