Global Macro Strategist
Summary: Morning APAC Global Macro & Cross-Asset Snapshot
(Note that these are solely the views & opinions, they do not constitute any trade or investment advice of any kind.)
To see this wk’s Macro Monday click here
APAC Global Macro Morning Brief
Happy Macro Wed 27 Nov 2019: Pause Button = Fed (for now)
So we had two FOMC members on tape o/n, Powell & Brainard...
Powell pretty much said the glass is half full, giving a positive take on the state of the US economy. Again as per his testimony from two wks back – for now, the pause button is firm pressed at the Fed
Brainard was also constructive on the economy, noting also that we still have not gotten the full effect of the three cuts this year
To see the full transcripts of their speeches please click here Brainard & Powell
Meanwhile the script is that equity markets continue to lift higher on news of further talks between Trump & Xi
So easy question, if the trade deal is as good as done, the Fed is happy with where things are, US flash PMIs bounced back strongly last wk, equities are up, volatility is down, then why are bond yields moving lower?
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Overnight econ data saw a mixed skew
NZ 3Q retail sales beat very strongly at +1.6%a 0.5%e 0.2%p – part of this is being attributed to the Rugby world cup, where the sensational All-Blacks picked up a bronze
Sticking with the beats, US house prices ticked up +0.6%a 0.5%e, whilst new home sales saw strong beat & upward revision at 733k a 708k e 738k p
On the misses, US CB consumer confidence missed a touch 125.5a 126.9e 162.1p. Richmond mfg. big miss at -1a 6e 8p. UK high street lending missed at 41.2k a 43.1k e & 424.2k p – this potentially correlates with the big flash PMIs misses we got last wk from the UK
Worth noting that BoJ Core CPI also missed at +0.3%a +0.4%e +0.3%p
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Cross-Asset Snapshot:
On equities, the bulls continue to have the field in the US & EU
S&P closed +0.22% at 3140, with Nasdaq-100 +0.17% to 8386. CAC40 +0.16% 5928. FTSE MIB +0.34% 23547
In Asia’s tue session, the ASX 200 was the outperformer at +0.83% 6788. The HSI (despite 9988 Alibaba’s HK successful listing & pop, +6.6% first day to 187.60 [176 was IPO strike]) reversed itself quite strongly into the close, finishing -0.29% to 26913
DXY not much to see, we were +5bp on Mon & -7bp on Tue (yawn)
Underneath the still waters of the USD, we do have a lot more activity – G10 saw big move on the SEK +0.50% vs. the USD, followed by CAD 1.3271 & NZD 0.6429 at +0.21% & +0.16% (Yes, our long kiwi crosses bias from last wk’s Macro Monday was very well timed)
On the flipside GBP 1.2864 & JPY 109.03 lost -0.26% & -0.11%
On EM FX, INR was the outlier with a +0.35% gain vs. the USD. Yet the likes of the Brazilian real 4.2386 +0.27%, Lira 5.7576 +0.30% & Mexican Peso 19.5191 +0.38% were on the backfoot vs the Trumpback
After over 2wks of dislocation between precious metals & lower yields – we started to get some sparkles overnight as USTs troughed to 1.7294, before reversing to these 1.7414 lvls
Gold recouped most of Monday’s loses with a +0.42% to 1461. Silver not to be outdone, clocked +1.10% to 17.0765
It’s the everything up market! No wait… volatility was lower, as VIX closed at 11.54 -2.8% for the session
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It’s a brilliant day & its only going to get more epic – lastly, Happy Thanksgiving remember the US is out tmr & most folks bridge to the wkd…
There is always a trade somewhere
Namaste
-KVP
Today:
Other:
Some Pieces From the Rest of the SaxoStrats Squad
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
