Pro-stimulus prepared remarks by Fed head nominee Janet Yellen sparked a rally on Wall Street overnight, helping lift Asian share markets which were further supported by Japan’s Q3 GDP reading showing the economy expanded at an annual pace of 1.9% during the period, ahead of consensus forecasts. Yesterday, candidate for the presidency of the Fed, Janet Yellen’s prepared testimony to US Senate suggests she will emphasise that the US economy is performing short of expectations with unemployment levels still too high which many believe is suggestive of extended stimulus measures by the central bank, if she indeed, is appointed as the new Fed head in 2014. Her comments will be widely interpreted as dovish by the market, spurring the bulls into action. Traders feel that ahead of the prepared comments by Yellen, ramping up risk appetite is an appropriate response, particularly after weakness across global markets in recent sessions. So, the Yellen comments combined with better Japanese GDP are currently overshadowing the release of damp growth figures out of the euro zone’s biggest economies. Both Germany and France reported weaker GDP prints for the Q3. German’s GDP rose by 0.3% during the period, lower than the 0.7% growth registered in the Q2. France’s reading was much worse – down 0.1% during the Q3 which is down from the 0.5% rebound registered in Q2. The full reading of euro zone GDP figures is due shortly with expectations that we are in for a weaker reading during the quarter now but with better performance from Spain. Later in the session, look out for US weekly jobless claims and trade balance data. ________________________________________ Ishaq Siddiqi Market Strategist
Posted on: Thu, 14 Nov 2013 08:43:36 +0000