Wake Me Up When September Ends

(apologies to Green Day)

Another record storm is headed for the US mainland; North Korea appears to be preparing for another missile launch, the looming US debt ceiling constraint saw 4-week T-bills yield rise to 1.3% at yesterday’s auction even as the 10-year yield plumbed to depths not seen since last November. In addition to the already busy schedule for the US Congress as they return from the summer vacation that includes aide for Harvey, the debt ceiling, spending authorization, an ongoing investigation into Russia’s attempt to influence the US election, we must add now six-month period to address the grown children of illegal immigrants.  

There are national elections in New Zealand, Norway, and Germany. The French labor reforms will spark industrial action in a week, but will still most likely be accepted by the Cabinet later this month before being implemented by decree, as Parliament has granted. In the UK, the government’s Great Repeal (transposing EU laws into English and Scottish law) is facing opposition in Parliament. Around midday in London, May faces questions by Labour leader Corbyn. The negotiations themselves are apparently proceeding sufficiently to turn the agenda to the post-amputee relationship.The EU’s chief negotiator is to brief the 27 countries today, but the deputy negotiator has already tilted the hand.  

The Reserve Bank of Australia met yesterday, and attention turns to the Bank of Canada today (ahead of the Riksbank and ECB tomorrow). Despite the talk about how central banks are exiting their extraordinary policies, only the Bank of Canada, among the major central banks, is likely to raise rates this year, according to investors.  

In the US, for example, economists have generally been more optimistic about another Fed hike this year than the market (which now looks to be a little less than a 1 in 3 chance). In Canada, a Bloomberg poll found less than 20% of those surveyed expect the Bank of Canada to hike today, while the OIS is discounting a little more than a 55% chance.