Overnight interbank lending rates dated for the ECB’s December 3 meeting are just below minus 0.28 percent, reflecting a view the bank will cut the deposit rate to as low as minus 0.35 percent. “A faster-than-expected withdrawal of monetary-policy accommodation in other major advanced economies could trigger a reversal of global term premia, which may also spill over to the euro area”. Consumer spending (http://www.marketwatch.com/story/consumer-spending-barely-rises-again-in-october-2015-11-25) rose slowly in October for the second straight month, as Americans boosted savings and spent less on new cars and trucks.
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Yields from Spain to Germany have fallen to record lows on speculation European Central Bank chief Mario Draghi will cut the deposit rate or expand its quantitative-easing programme. It last stood at 99.777.
European stocks followed suit at the open but soon clawed their way back up on rising expectations of ECB action and after data from the European Commission showed confidence in the euro bloc hit its highest level in over four years in November.
“Ultimately, I think the European Central Bank will be aggressive and that divergence in policy with the United States must imply a weaker euro”, said Chris Scicluna, head of economic research at Daiwa Capital Markets in London. The Nasdaq composite index gained 0.6 percent.
The yen was little changed against the dollar at 122.58 per dollar, showing no response to a series of Japanese economic data including the jobless rate, which unexpectedly fell to a two-decade low of 3.1 percent.
US crude fell 1.2 percent to $42.37 per barrel and Brent dropped 1.5 percent to $45.42. We could be looking at a very overcrowded trade at this stage and the lack of downward momentum, as can be seen on the MACD histogram, may suggest that more significant losses will be hard to come by.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5 percent, after Wall Street put in a almost flat performance ahead of the U.S. Thanksgiving holiday.
A five-year bond due in November 2020 fetched an average yield of 0.37 percent, down from a previous record low of 0.53 percent posted at auction last month. Some of the nation’s largest brokerages disclosed regulatory probes and two more companies said they’re struggling to repay bonds.
Japan’s Nikkei 225 lost most of its early morning gains and traded 0.37% lower, moving further away from the elusive 20,000 benchmark that has not been seen since mid-August.
The euro has fallen 3.6 percent versus the dollar this month, the worst-performing Group-of-10 currency after the Danish krone. For the week, it was up about 0.2 per cent.
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Turkey shot down a Russian craft near the Syrian border on Tuesday, saying the jet had violated its air space, in one of the most serious publicly acknowledged clashes between a North Atlantic Treaty Organisation member country and Russia for half a century. Bullion for immediate delivery was down 0.7 per cent at US$1,064.98 an ounce, according to Bloomberg generic pricing.
