European Union

With just hours to go before the German election, Angela Merkel looks set to remain Chancellor for a record fourth term. This suggests largely unchanged economic policies, focusing on fiscal prudence and conditional steps towards European integration. However, with new political winds clouding the outlook for globalization, trade relationships and security in Europe, and with lingering questions on the sustainability of the EMU, Germany can ill afford to rest on its laurels, according to SocGen.

As promised, the European Commission responded promptly to Theresa May's speech with remarks from Michel Barnier hitting the tape, in which he says that "Prime Minister Theresa May has expressed a constructive spirit which is also the spirit of the European Union during this unique negotiation" and notes that "Today, for the first time, the United Kingdom government has requested to continue to benefit from access to the Single Market, on current terms, and to continue to benefit from existing cooperation in security.

S&P futures retreated along with European and Asian shares with tech, and Apple supplier shares leading the drop while safe havens such as gold and the yen rose, as the war of words between U.S. President Donald Trump and Kim Jong Un escalated and North Korea threatened to launch a hydrogen bomb, leading to a prompt return of geopolitical concerns. Trade focus now turns to a planned speech by Theresa May on Brexit (full preview here).

On Friday - a day many have called  "the most important day for Brexit since the referendum" - Theresa May will delivers her much anticipated Brexit speech in Florence. The roughly 5000-word speech is scheduled at begin around 09:15 EDT and is expected to provoke an immediate response from Brussels.

The day has finally arrived: today the Fed will officially announce the start of its balance sheet shrinkage (full preview here) while keeping rates unchanged, perhaps hiking again in December (market odds at 56%), while revising its economic projections and "dots", most likely in a lower direction.