Morning Commentary: Seat Belts Will Be Required

A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.

Seat Belts Will Be Required Share this story: Alan Rose Foreign Exchange Head Trader

We seem to be entering a new and different phase of intraday and interday volatility in the markets. U.S. exceptionalism regarding growth and rising interest rates has been a steady and dominant theme in the markets over the past year and beyond.  However, market pundits and commentators are becoming increasingly concerned about a potential end game to that scenario of continually rising equity prices and interest rates.   A steady and methodical rise in interest rates, beginning in 2015, has done little to derail the economy or U.S. equities fueled further by tax cuts and deregulation under President Trump. Over the past month, rates have been rising sharply and has dented equity optimism as interest rates approach 10-year highs. This combined with softening in housing, automobile sales, and a mini-tech meltdown are raising questions about U.S. equity performance that could impact Fed interest rate policy if equities should melt down and ripple through all asset classes.   Overlaid of top of our domestic issues are an international and geopolitical array of issues that remain unresolved and will continue to hang over the market with uncertain outcomes. These issues include Chinese trade war tensions, Brexit, Iran, Turkey, Germany’s coalition government, elevated oil prices and now Saudi Arabia. The outcome of the U.S. midterm elections are also just around the corner. All of this means that markets will remain increasingly emotional and anxious for investors and traders. Buckle Up! HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT: U.S. Retail Sales for September were disappointing as they rose by only 0.1% against expectations of a rise of 0.6%. Retail sales ex-auto also disappointed at -0.1% against expectations of a rise of 0.4%. U.S. interest rates are fractionally lower on the news and the U.S. dollar is weaker today after testing higher overnight.

If we can help you with any Foreign Exchange needs, please email foreignexchange@cnb.com or call (800) 447‑4133. Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!

Follow City National Bank on social media:

Investment and Insurance Products: • Are Not insured by the FDIC or any other federal government agency • Are Not deposits of or guaranteed by a Bank or any Bank Affiliate • May Lose Value This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. The Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.

Unsubscribe from this list  |  Update email preferences This message has been sent to bank@banking.offers.report. Please do not reply to this email. To ensure the delivery of future emails, please add foreignexchange@emails.cnb.com to your email address book or safe sender list. Copyright ©2018 City National Bank – All Rights Reserved. 350 South Grand Avenue, Los Angeles, CA 90071 City National Bank is a subsidiary of Royal Bank of Canada. TERMS & CONDITIONS  |  PRIVACY STATEMENT NMLSR ID# 536994 | CNB MEMBER FDIC