APAC Morning Brief

Macro
Kay Van-Petersen

Global Macro Strategist

APAC Daily Morning Brief - Fri 30 Aug 2019

Happy Macro Friday & TGIF Everyone!

O/N & Levels:

Really risk-on driven by comments from China, showing that they are still open to a dialogue with the US - don't believe in responding yet, to Trumps counter tariffs, yet do point out they have many options. So for now potential Sep meetings are still open

Key thing that we all need to think about & communicate to our clients is, what is Trumps 2020 election strategy?

Because if he is going to be running on Tariffs... then we could have another +1yr of head fakes, fatigue & uncertainty in the market which is not conducive to a continuing deceleration in global growth. What it is conducive to though, is more structural reform by China as well as continued pivoting of the RoW from the US - as well as calls for different global payment system outside of the USD (a la Mark Carney comments a JH last wkd)

So whilst we did have a very strong session o/n with the like of the S&P rising by +13% to 2925 lvl & the VIX deflating by -7.6% to 17.88. We do still have US 10yr bond at sub 1.50%, bunds are still -69bp & JGBs -29bp (all three a touch wider since Wed). The combination of higher yields, as well as a stronger USD (DXY popped up to +98.50 with a +30bp move) & risk-on for equities saw some correction & potential profit taking in the likes of Gold 1528 & Silver 18.25 which fell by -74bp & -50bp. 

On the econ data side, 2nd reading of 2QGDP in the US was in-line at 2.0%.

The Flash CPIs from GER & SP missed, with the former coming in at -20bpa vs. -10bpe. Yes - not exactly unicorn & rainbows on the German economy following its -10bp final 2Q GDP growth figures (3Q GDP due on Nov 14).

On the bulls' side we did get FRA GDP beating at +30bp a vs. +20bp e. 

Lastly 2/10s continue to be inverted at c. -3bp, we'll cover more on this on Macro Monday - the general takeaway here is that historically, this has indicated that a US recession is on the way in c. 18-24months, so think indicating potentially back-end of 2021. 

Question we all should be asking ourselves is, if we think yields are low now & the likes of gold & silver are high... where are they when we are in a US & likely global recession in 1.5 - 2yrs?

And of course the answer is we are likely significantly much lower in yields (we will take out the 1.32% lows on US 10yr set in mid 2016), continuing to set new record lows & the flip-side should hold with gold & silver which should accelerate to all-time record new highs. 

I was on bloomberg radio earlier in Asia this morning & expressed my disbelief that a lot of people still do not fully appreciate this.



Today:

Key Aus data on building approvals & private sector credit

US has personal spending & income, Chicago PMI & UoM Sentiment

CA monthly GDP & some key price indexes (remember their lastly monthly CPI beat strongly last wk)

CH should have official PMIs out tmr on Sat with mfg. & Serv expected at 49.7 & 53.6


Next Week:

A lot on, including long wkd in the US given labor day. We obviously have Sep 1st Sun being implementation of latest CH tariffs. We will be getting final PMIs across the board as well US NFP & Wage Growth. Whilst there is a lot of Fed speakers a lot of central bank decision will be on from the likes of Australia, Canada, Russia, Turkey, Malaysia & Chile.


Other:

Its worth noting that things may escalate to new heights this wkd in Hong Kong. So for our friends, families, colleagues, clients & of course Hong Kongers wishing you all the safest & smoothest wkd possible.

Don't forget long wkd in the US given Labor day on Mon - the risk of further tariff escalations over the Sep 1st implementation date, have been dramatically reduced (for now) over the last 24hrs with the comments from China yest. that lifted sentiment. 

Catch us on Macro Monday either during the live call at 08:30 SGT/HKT 20:30 ET or the replay link later on Home.Saxo

Have a great productive & restful wkd. 

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide and Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.