Despite more data that questioned the health of the current macroeconomic environment asset markets had one of their best weeks in months. Energy and Materials, the two weakest sectors so far in 2015, led the rally with each rising over 7%.
The first release of Fed minutes since the September FOMC meeting revealed a Committee concerned with the impact global weakness would have on the future path of inflation. As a result murmurs have grown that the Fed will bypass a rate hike this year entirely.
Oil prices posted their strongest gains in months this week. A lower rig count, comments from OPEC regarding potential cutbacks and increased hostility in Syria are all said to be contributing factors. Some energy names have risen over 10% in the past month alone.
German exports saw their biggest decline since 2009 during the month of August according to new data. Poor numbers were expected given weakness globally, particularly in China, but the magnitude took markets by surprise. The recent rise in the Euro does not bode well for German manufacturers.
Chinese foreign exchange reserves declined by a record amount during the third quarter. The government’s intervention to keep the Yuan stable and high levels of capital outflow resulted in a fall of $43 Billion during the period.
Negotiators finally completed an agreement on the Trans-Pacific Partnership, a deal that will reduce tariff for about 40% of the global economy. Passage of the agreement is likely given the President’s “fast track” authority but could take several months due to Congressional wrangling and a necessity to put the finishing touches on the deal.
This week marked the beginning of the third quarter earnings season in U.S. markets. Current estimates call for a -5.5% decline in earnings for the quarter. If such estimates materialize it would mark the consecutive quarterly declines since 2009.