Global Macro APAC Morning Brief
Summary: Morning APAC Global Macro & Cross-Asset Snapshot
Happy Macro Thu! - APAC Global Macro Morning Call
Thu 5 Sep 2019
O/N & Levels:
Pretty big rally spearheaded by Hang Seng’s c. +4% move yest, that was triggered by Carrie Lam withdrawing the extradition bill. How much of this is a short squeeze, near-term rather than a structural bottom time will tell
From our viewpoints from MM – issues here are much deeper than the bill, it goes to the social imbalances that have been laid out over years by HK tycoons & the HK government being very cozy with one another, whilst forgetting a large segment of society. This is a global theme & one that we have flagged multiple times in our quarterly outlooks
This is likely not something that will get solved in the near-term, even if Lam was to resign & step down, amnesty give, etc…
Note, I am not saying we cannot trade higher on local mkts (of course we can), just bear in mind things are not yet solved
US & Nasdaq had decent +1.1% & +1.4% pops to c. 2940 & 7720 lvls. Big pullback in volatility as VIX cratered close to 12% to close around 17.33
Govies a touch wider given the equity risk on, yet still in similar ranges of late: 1.47%, -67bp & -28bp from 10yr bonds in the US, GER & JP. It is worth noting that the 2/10s have steepened back into positive territory at +2.3bp
Oil was one of the clear standout o/n with a +4.2% rise… following a weak start to the wk (had lost c. -3.6% by Tue close), note US inventories will be out today… a day later than usual given the labor day wkd we had
UK – meanwhile Bojo seems to have gotten himself in a pickle, where it looks like a snap election cannot be called (House of Commons did not back his call for early elections) & there could be an extension (heaven help us) to Jan 31, 2020
What miracle this extension will bring, really boggles the mind. What is killing the UK economy & political landscape through a thousand cuts is all the uncertainty
US: Challenger job cuts, ADP, Final Services PMI 51.0e 50.9p, ISM non-mfg 54.0e 53.7p, Factory Orders 1.0%e 0.6%p, Crude Oil Inventories
EZ: GER factory orders -1.5%e 2.5%
SWI: Quarterly GDP plus SNB’s Jordan speaking (remember swiss central bank has lowest negative rates globally)
Link to this wk's Macro Monday: Trump is looking to force the Fed's Hand
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.