U.S. Industrial Production and Capacity Utilization for September; Canada Housing Starts for September.
Stock futures edged lower after data showed that China's economic growth slowed sharply in the third quarter, and investors weighed the risk to global growth from stickier-than-anticipated inflation, supply-chain problems and heightened demand for energy.
Data out Monday showed China's economy grew 4.9% in the third quarter from a year prior, a slowdown from the second quarter's 7.9% rate. Power shortages and supply-chain problems added to the impact of Beijing's efforts to rein in its property and technology sectors.
The slower growth data are "a reminder that China is expected to lose some of its momentum, but also how these global issues like the energy crisis and supply chain issues will filter through to global growth," said Edward Park, chief investment officer at U.K. investment firm Brooks Macdonald. "There's just a bit of rebasing of expectations for China and the rest of the world."
"We're in a mid-cycle slowdown," said David Chao, global market strategist for the Asia Pacific ex-Japan region at Invesco, adding that Chinese markets were in for continued uncertainty and volatility in the near term. Still, he added: "Keep in mind the government has many tools to propel the economy forward."
A strong start to earnings season has underpinned hopes that companies can weather mounting challenges. Albertsons and State Street are set to report quarterly results before the market opens.
U.S. industrial production data for September, due at 9:15 a.m. ET, is expected to show a seventh consecutive monthly increase. The measure of output at factories, mines and utilities has been buoyed by strong consumer demand for manufactured goods, though supply-chain disruptions and a semiconductor shortage could curtail auto production and drag down headline figures.
Investors have raised their expectations on the Fed lifting interest rates following better-than-expected U.S. retail sales data on Friday, and this should continue to support the dollar, ING said.
"The strong release prompted one of our preferred metrics of Fed tightening expectations--the 1m USD overnight index swap priced three years' forward--to jump to a new high for the year," ING analysts said.
"This is a dollar positive, especially against low-yielding currencies with dovish central banks and against energy importers," they said. The Dutch bank expects the DXY dollar index to remain higher on Monday, trading in the range of 94.00 to 94.50.
Bitcoin, the world's largest cryptocurrency by market value, gained 4.1% from its 5 p.m. ET level Sunday to trade at $61,932.69. The U.S.'s first bitcoin exchange-traded fund is expected to start trading Tuesday.
The different policy paths that the Bank of England and the European Central Bank seem to be taking point to moderate strength for the pound against the euro, said Commerzbank.
"If ECB and BOE deliver what their governors are promising--i.e. rate hikes in the UK and at least a gradually expansionary monetary policy on the Continent--,what will matter going forward is which point of view seems more plausible over the coming months," said Commerzbank's Ulrich Leuchtmann.
The longer the accelerated inflation level persists, the more attractive the BOE's stance is likely to seem, he said.
The Turkish lira fell to a record low versus the dollar as the country's central bank is expected to cut interest rates further at Thursday's meeting despite elevated inflation.
The lira's recent slump is unlikely to prevent Turkey's central bank from lowering its policy rate again on Thursday after last month's 100 basis points cut, Commerzbank's Ulrich Leuchtmann said.
"The bank is no longer interested in the effects of its interest rate policy on exchange rates, inflation and in the end the stability of the Turkish economy." Ultimately the bank's decisions are taken by President Recep Tayyip Erdogan, who wants lower rates, Leuchtmann said.
In bond markets, the yield on the 10-year Treasury note ticked up to 1.603% Monday, from 1.574% Friday.
European core government bonds sold off early Monday on what KBC Bank attributes to the fact that high inflation readings continue to weigh on sentiment. "Core bonds remain in sell-off mode this morning as you can't look beyond the uncomfortably high inflation stories," KBC said.
It added that European money markets continue to pull forward a first interest rate rise by the ECB towards the end of 2022 or early 2023.
Brent crude oil rose with prices having begun their rise during Asian trading hours with coal prices rising there too. That suggests the Asian power crunch is back on investors' minds, said OANDA's Jeffrey Hally.
"With no signs of the China energy crunch alleviating soon, and with the rest of Northern Asia and Europe competing for scarce energy supplies, particularly gas, the price environment for oil remains constructive," he added.
European benchmark gas prices were down 2.5% at EUR91.31 per megawatt hour, after slipping on Friday in a move that "suggests the market has started to price in an expected normalization of Russian flows," said Goldman Sachs's Samantha Dart.
Copper prices rose to their highest level in five months as stockpiles dwindled and the energy crunch raises concerns about supply.
LME copper stock levels have been dropping almost constantly since August and currently stand at their lowest level since June.
"Focus remained on the tightening spreads as traders scramble for metals, " said brokerage Marex. Concerns about energy-related production shutdowns are also pushing investors to bet on higher prices still to come.
Speculators increased their net-long bets on all LME base metals except nickel last week, with the net long in zinc jumping 30% last week, the brokerage said.
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