ECB and Bank of Canada meetings, Australian inflation to headline huge week ahead

The Morning Wrap

Livewire Markets

Welcome to Charts and Caffeine - Livewire's pre-market open news and analysis wrap. We'll get you across the overnight session and share our best insights to get you better set for the investing day ahead.




Source: Yahoo Finance
Source: Yahoo Finance


  • Bombed-out sentiment, low bar for good news, and high bar for bad news may be signs of a bottoming
  • Money managers see little respite ahead from bond-market turbulence
  • Biden confirms his intentions to run for reelection in 2024
  • Xi Jinping secures an unprecedented third term 
  • Boris Johnson working to sew up the nominations he needs to stand for another stint as PM 
  • Unclear whether Russia's preparations will allow it to continue delivering oil to its buyers 


Source: Forex Factory
Source: Forex Factory

Brace yourselves. This week is going to be absolutely massive. It all starts Monday evening with PMI reads from across the Eurozone and the United States. If a global recession is going to start there, this is where the clues will pop up. 

Wednesday brings US consumer confidence and Australian inflation. The current consensus forecast is for a 1.5% increase quarter-on-quarter (core) or 1.8% (headline). Remember, monthly partial inflation from the ABS already suggests we're running at nearly 7% year-on-year for price rises. That makes any upside very concerning indeed.

But even that is nothing on a HUGE Thursday for central banks. The Bank of Canada and the European Central Bank both meet then - and both will have to raise rates. I could attach a consensus view on the latter, but ING summed it up beautifully:

"A 75bp hike looks like a done deal but the European Central Bank has a lot on its plate at its October meeting. Quantitative Tightening talks are premature but it will seek to mop up bank liquidity. Rates, sovereign, and money market spread upside dominates with the 10Y Bund set to test 2.5%. None of this should be enough to support the EUR/USD." (ING Economics)


Today, we're doing a mea culpa and then a look ahead. First, the mea culpa - and specifically, the ASX OIS curve from March 2022. If you look closely at the bottom right, you'll notice that traders had a 2.5% cash rate priced in for August next year. Oh, how wrong they were.

So with that said, let's take a look at what traders are now expecting - and this is as of market close on Thursday, October 20th. Will they be proven wrong again? I'm sure homeowners and shareholders will hope so. Only time (and the RBA's communication) will spell the story.


Last week, the Australian Fund Manager Awards were held (with Airlie's Matt Williams taking home the Hall of Fame prize). But you couldn't help but think of the environment surrounding the room. Strong outflows across the industry have seen domestic asset managers significantly de-rate since early 2021, but Morgan Stanley anticipates we may reach a turning point soon. 

As a result, Morgan Stanley has turned on some of the top names on the ASX. Its new favourite play is GQG Partners (ASX: GQG) because of its exposure to global equities. It also likes Perpetual (ASX: PPT).

But unfortunately for Matt (and his colleagues), the least preferred fund manager is (still) Magellan Financial Group (ASX: MFG) as the broker feels downside risks are not accounted for in the valuation.


Truss will collect a £115,000 annual pay cheque and be entitled to a raft of benefits for the rest of her life, even if she only served 44 days in the UK's top job. 
Truss will collect a £115,000 annual pay cheque and be entitled to a raft of benefits for the rest of her life, even if she only served 44 days in the UK's top job. 


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Livewire and Market Index's pre-opening bell news and analysis wrap. Available weekday mornings and written by Kerry Sun.

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