Global Macro Strategist
Summary: Morning APAC Global Macro & Cross-Asset Snapshot
TGIF & Happy Macro Fri 27 Sep 2019
APAC Global Macro Morning Call
O/N, Levels & Thoughts:
Nothing new & material standing out to me overnight… expected steam around the whistle blower & the dem's move to start an impeachment investigation
Asset Class Overview:
Continuing to see the grind up in the US Dollar Continue, DXY above 99 into the end of the wk is technically very bullish – it could mark the first wkly close on the DXY since May 2017, giving Trump & the Fed one more headache into the wkd
Spot gold 1505 was basically flat o/n, yet spot Silver 17.82 continued on the retreat with a -0.49% move. Brent Crude revered it previous day’s move with a +0.34% climb to 62.60. Copper 257.75 & Palladium 1643, went separate ways at -1.35% & +1.93% respectively
US equities closed down, despite a positive close across the board from their European cousins. We have the Dax up +0.44% at 12288 whilst the S&P 2977 & the Nasdaq100, 7772 were down -0.24% & -0.40%. VIX whilst up c. +14% over the last 4 trading days, was up +0.69% o/n to 16.07
Bond yields were a touch tighter, yet we are not too far off of the ranges we have been: USTs 1.69%, Bunds -58bp & JGBs -25bp
Central Banks:
As per consensus views, we saw 25bp cuts o/n from central banks out of Mexico & the Philippines, bringing those respecting rates to 7.75% & 4.00%
ECON:
The EZ saw an expansion in Money Supply at 5.7%a 5.1%e, private loans meanwhile were in-line at 3.4%. US final 2Q GDP reading was also in-line at 2.0%
Wholesale inventories missed climbed to 0.4%a vs. 0.1%e & the unemployment claims at 213K were not far off from the 210k that was expected
Today:
Next Week:
Other:
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach
