Equities sputtered as some of the central bank euphoria waned. Oil fell about 3.5% after advancing earlier by almost 3% on confirmed reports by both The Financial Times and Reuters that Saudi Arabia agreed to cut daily production by 1 million barrels to around 9.5 million barrels if Iran kept its daily production unchanged at August’s level of 3.6 million. These stories were disavowed by a Saudi spokesperson.
According to the IEA, the oil market is oversupplied around 500,000 barrels
However by midafternoon the production cut/freeze story was resurrected by “two people familiar with the negotiations” stating that any formal decision will be made when OPEC meets again in two months.
As written Friday there is little conviction of agreement in this week’s meeting thus begets the question why the volatility? Three weeks ago there was a record short interest in crude and any type of positive news will generate an outsized response. Moreover trading/volatility is greatly influenced by technology based trading platforms.
Earnings season is quickly approaching. Will there be any high profile warnings?
This week the economic calendar is heavy. There ae numerous housing statistics, manufacturing information, various diffusion and spending indices and the final estimate of second quarter growth. How will the data influence trading and monetary policy expectations?
And then there is the election? How will tonight’s debate be interpreted and will these interpretations influence the market?
Last night the foreign markets were down. London was down 1.15%, Paris down 1.65% and Frankfurt down 1.51%. China was down 2.07%, Japan down 1.25%and Hang Sang down 1.56%.
The Dow should open moderately lower ahead of tonight’s debate and a meeting between major oil producers. The latest polls indicate a dead heat between Trump and Clinton. The 10-year is up 4/32 to yield 1.60%. Oil is up about 1%.
