Global Macro APAC Morning Brief

Global Macro APAC Morning Brief

Macro 1 minute to read
Strats-Kay-88x88
Kay Van-Petersen

Global Macro Strategist

Summary:  Morning APAC Global Macro & Cross-Asset Snapshot


Tēnā koutou katoa, TGIF & Happy Macro Fri 20 Sep 2019 – APAC Global Macro Morning Call


O/N, Levels & Thoughts:

Econ Wise: We got a beat in 2Q NZ GDP to 2.1%a 2.0%e 2.5%p. In Australia whilst headline jobs data beat 34.7k vs. 15.0k that was expected, there was a large reduction in full-time -15.5k vs. an increase in part-time workers +50.2k, the unemployment rate also kicked up to 5.3%a vs. 5.2%e/p. OECD cuts global growth to 2.9% for 2019

We also had central bank rate decisions out Indonesia, Taiwan, Japan, Switzerland & the United Kingdom… <= respective links to their statements… latter four left rates unchanged at -0.10%, -0.75% & +0.75% respectively. Bank Indonesia cut rates by 25bp to 5.25% in-line with expectations

Bottom line from KVP’s side, its really all about the Fed (global impact wise)… ECB has even less current unity within it ranks for looser monetary policy

One key aspect about the “lack of expected response” from both the ECB & the Fed, is that it moves the ball closer to the fiscal policy side of things. The unintended consequences of Central Bankers continuing to be aggressive on the QE taps post GFC, is that they ended up doing all the heavy lifting, allowing government policy makers -  fiscal stimulus and structural change perspectives – to easily step back because there was not enough pressure on them.

This is the paradox of monetary & fiscal policy – the latter only tends to really be activated during periods of shocks & recessions to the economy (despite it potentially having greater sustainable positive implications – i.e. Trump tax break bad on long-run for the economy, multi-trillion dollar infrastructure build good for long-run of the economy), whereas the latter is meant to smoothen out the volatility in the business cycle… yet all it does is build up the cancer (debt & complacency) that will eventually have to be flushed out… You can run from Global Macro for a long time, yet you can never hide forever… Its NEVER Different This Time…

The Fed continues to pump liquidity into the system with $75bn injected, this will mark the 3rd day in a row where the Fed has been active in the repo market… we can likely expect them to be present today (Fri Sep 20)


Levels: Weaker USD driven by a tiny pop in Euro & a bigger strengthening on the yen vs. the USD…. DXY at 98.27 -0.29%. Meanwhile cable 1.2523 +0.43% got to 2month highs, as prospects of a successful Oct 31 deal seemed to increase.

UST are still round the 1.78-1.80% lvls they were coming out of the FOMC decision. We have bunds 7 JGBs around -50bp & -21bp.  

Brent crude reversed a two days of a big pullback to close +1.26% to 64.40, perhaps linked to Trump asking for “very significant” sanctions on Iran, as well as hinting at potential conflict – as we have flagged a few times on Macro Monday, the prospects for a conflict (any conflict) as part of a re-election strategy in 2020, is far from 0. It would be a page out of Bush’s re-election strategy on Iraq.

Gold 1498 +0.34% & Silver 17.78 +0.19% a touch higher, SPX 3007 flat for the session, with EZ EQ having a much more solid bullish session. The EuroStoxx bank index flew to 88.74  +2.42%.

Today:

  • JP: National Core CPI
  • NZ: Credit Card Spending
  • EZ: GER PPI, Cons. Conf.
  • UK: BoE Quarterly Bulletin
  • US: FOMC members Williams & Rosengren (latter abstained for no rate cuts) are speaking

Next WK – So what does week #39 bring to the table?

  • ECON: Flash PMIs across the board, including final 2Q GDP out of the US +2.0%e/p where durable goods, personal spending + income alongside the PCE will key
  • Central Banks: Rate decision out of RBNZ (last time they cut, they gave the market a shocker with a -50bp cut) here is the link to their last statement (slide 4), as well as Thailand, Philippines & Mexico
  • Monetary Policy Makers: A lot of Fed speakers will be on the tape, plus we should also have central bank heads Draghi, Kuroda & Lowe dur to speak as well
    • Just a very key point here… anything coming out of Bullard (wanted a -50bp cut) or Rosengreen & George (both wanted no cuts) is that more important to monitor in the future, for a change in their stance. I.e. Bullard turning hawkish, or George/Rosengreen turning dovish!


Other:

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.