Hitt og þetta 11. september 2006


US SUMMARY: Inflation, Fed Speakers On Tap

DJIA 11392.11 gain 60.67 up 0.5%
NASDAQ 2165.79 gain 10.50 up 0.5%
S&P 500 1298.92 gain 4.90 up 0.4%
Dow Future 11376.00 loss 7.00 dn 0.1%
NASDAQ Future 1588.00 loss 1.50 dn 0.1%
S&P Future 1309.50 loss 1.00 dn 0.1%
Euro-USD 1.2676 gain 0.0006 up 0.05%
10-Yr US Treasury: 4.78% down 0.02
(Futures values, Treasury, EUR/USD Data as of 0450 GMT)
After an extended summer vacation, Wall Street is expected to get back to its normal energetic pace this week with the release of August consumer inflation and retail sales reports. The dollar opens well bid, while Treasurys investors face more Fed speakers Monday. Oil continues under pressure.

STOCKS: Although trading volume on Wall Street will likely be light the first part of the week, as it was for much of the past month, it should pick, with economic data including the Commerce Department's retail sales figures and the Labor Department's consumer price index due Thursday and Friday respectively.

In the meantime, investors will get a look at how some of the major brokerages are faring as the economy slows, with reports due from Goldman Sachs Group, Lehman Brothers Holdings and Morgan Stanley.

The market will also be waiting to see whether more companies issue warnings about third-quarter profits. Wall Street at first was rattled last week by warnings from several homebuilders, all of which noted a precipitous drop in demand. But by Friday, Wall Street shrugged off yet another warning from a homebuilder about declining demand, and markets rebounded moderately from two losing sessions as oil prices dropped further.

Stuart Schweitzer, global markets strategist at JPMorgan Asset and Wealth Management, predicted that a cooling economy could lead to a Fed rate cut in the first half of next year. "I think the market is in a tug of war between the potential benefits and problems from a slowdown in the economy," he said.

FOREX: The dollar is slightly lower, after it rallied Friday as the euro's technical supports fell, especially $1.2690. Some analysts said the continued liquidation of yen carry trade positions put downward pressure on all currencies against the yen, from which the dollar benefitted.

A major focus of the market remains on the thorny issue of currency flexibility and the upcoming G7 nations meeting this week in Singapore.

"Official comments surrounding G7 and IMF meetings remain risks for a market still well short of yen and long euros," said Marc Chandler, global head of foreign exchange at Brown Brothers Harriman in New York.

BONDS: This week, Treasury bond investors face a variety of pitfalls, beginning with a trio of Fed speeches and ends with the all-important inflation numbers. The consensus among market commentators is that trade will be more volatile in the coming days.

"In the near term we would expect rates to continue to trade in a choppy pattern with bearish tone," said Michael Pond, Treasurys strategist with Barclays Capital in New York.

Any acceleration of inflation in August would unnerve for policy makers, because it would coincide with the central bank's decision at its August meeting to pause in its rate hiking campaign for the first time in two years.

Regional representatives Cathy Minehan, from the Boston Fed, Donald Kohn, Fed governor, and William Poole, St. Louis Fed president, all have public engagements Monday.

"Any Fed speaker has potential to move the market," Pond said, adding that the focus would most likely be on Kohn, as vice chairman, and a voting member of the Federal Open Market Committee.

OIL: Prices have fallen in recent days as inventory figures showed increases and as tensions with Iran over its nuclear ambitions eased. The end of the summer driving period, coupled with a lighter-than-expected hurricane season have also helped lower prices. Light, sweet crude was down $1.07 cents at $66.25 a barrel on Friday.

ASIAN SUMMARY: Oil Issues Lead Asian Markets Lower

USD-Yen 116.75 loss 0.13 dn 0.1%
AUD-USD 0.7530 loss 0.0008 dn 0.1%
Nikkei 225 15956.20 loss 124.20 dn 0.8%
Hang Seng 17123.22 loss 22.54 dn 0.1%
S&P/ASX 200 5001.50 loss 61.70 dn 1.2%
Taiwan Index 6701.55 gain 8.44 up 0.1%
S.Korea Kospi 1342.00 loss 12.89 dn 1.0%
JGB Yield 1.7000% up 0.0200
(All values as of 0450 GMT)
STOCKS: Japanese stocks fell Monday as traders sold oil issues following a drop in crude prices. Declining prices of commodities hit the Australian stock market.

FOREX: The dollar is expected to trade in a range of Y115.00-117.50, pending the G7 gathering at the weekend. Meanwhile, dealers say the yen-based pressure on the euro is dissipating.

BONDS: Prices of Japanese government bonds gained on continuing relief over the Bank of Japan's renewed pledge Friday to lift interest rates gradually. While sentiment remains solid, further gains may be difficult before Tuesday's 5-year JGB auction. Key data on July machinery orders are due at 0500 GMT.

METALS: Gold fell below $600 an ounce for the first time in 10 weeks in Asia Monday, as technically-inspired selling combined with lower crude oil prices and a firmer U.S. dollar. It was trading at around $599.50. Traders expect $596/oz to offer some buying support and noted the emergence of modest physical buying interest ahead of India's wedding jewelry season.

Copper futures were slightly lower, but potential supply worries from ongoing mining labor issues kept losses to a minimum.

OIL: Prices dipped 35 cents to $65.90 in Asian trading as concerns over supplies eased with the expectation that OPEC ministers would leave production targets unchanged when they meet on Monday. Also, Iran is ready to consider complying - at least temporarily - with a U.N. Security Council demand that it freeze uranium enrichment and has said so at talks with a senior European negotiator.

EUROPEAN OUTLOOK: Stocks Lower On Lower Oil/Metals

Euro-USD 1.2676 gain 0.0006 up 0.05%
Stlg-USD 1.8656 gain 0.0007 up 0.04%
USD-Franc 1.2476 loss 0.0003 dn 0.02%
(All values as of 0450 GMT)
European shares are set for a lower start, with government debt prices a touch higher. The euro is seen stabilizing at lower levels.

STOCKS: European markets are likely to be dragged lower at the open, hit by weaker oil and commodity stocks.

U.K. spreadbettor Cantor Index is calling the FTSE down 4 points at 5875, the DAX down 10 at 5785 and the CAC down 6 at 5067.

European stocks ended higher Friday, helped by a fresh pullback in crude-oil futures. Telecom Italia ended 1.4% higher in Milan after reports said it's holding informal talks to sell its mobile-communications division, a deal that could reportedly generate some EUR35 billion. The reports said Telecom Italia was looking at ways to trim its debt. Telecom Italia reports earnings on Monday, when a restructuring strategy could also be announced.

FOREX: The euro is still struggling but has some room for maneuver in a starting range of $1.2640 to $1.2680. Dealers say the market is anxious about the G7 meeting coming up and any forex statement the summit might fashion.

BONDS: Euro zone wages and consumer price inflation this week should help clear up the monetary policy picture, given the ECB's tough stance on inflation but with a growth slowdown seen for next year.

The European Union's statistics office is expected to confirm that the euro zone's annual inflation rate fell to 2.3% in August from 2.4% in July, when it publishes its final estimate on Friday. Citigroup's economics team predicts that core inflation slowed to 1.5% in August from 1.6% in July.

Thursday's euro zone labor-cost data will show whether the European Central Bank should worry that higher consumer price inflation will lead to rising wage settlements. Annual wage inflation is seen rising to 2.3% in the second quarter from 2.2% in the previous quarter, according the consensus forecast of five economists surveyed by Dow Jones Newswires.

ECB President Jean-Claude Trichet Saturday said there are upside risks to the inflation outlook for the euro zone, while the currency area's finance ministers cautioned that growth could slow in 2007.

Trichet said the central bank would continue to exercise "strong vigilance" in the face of inflationary risks, a phrase that typically indicates its willingness to raise interest rates in the near future.

Bundesbank President Axel Weber Saturday gave an upbeat assessment on the global economy, though he said that growth rates may have peaked.

European government bond prices rose Friday on a combination of technical buying, short-covering and a light safety bid.

CALENDAR: Monday, Sep 11: UK PPI, Fed Speakers

GMT Expected Previous
0500 JPN Jul Machinery Orders -5.5%MM +8.5%MM
0645 FRA Jul Mfg Production
0645 FRA Jul Indus Production Index
0830 UK Aug PPI Input/Output
0830 UK Jul UK Trade
1200 US Boston Fed Pres Minehan speaks at the
Natl Assn for Business Economics meeting, Boston
1400 US 2Q Manufacturers' Profits 9.6%
1515 US Fed Gov Kohn speaks on "The Strategic
Vision of the US Payment System for
Financial Institutions" in Las Vegas
1530 US Asst Tsy Secy Fratto holds press briefing, Washington
1545 US St. Louis Fed Pres Poole speaks at the
Natl Assn for Business Economics meeting, Boston
N/A GER Sep DIW's Economic Sentiment