Global Macro APAC Morning Brief
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
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%
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
- JP: Tokyo CORE CPI
- EZ: German Import Prices, French Consumer Spending & Flash CPI
- US: Durable Goods, Personal Spending, Personal Income, CORE PCE Price Index, UoM
- Plus FOMC member Quarles @ 20:30 (SGT/HKT)
- Key focus will be all about Oct 1st, China’s 70yr National anniversary. They will be looking to flex their muscle. Key thing is will we potentially see ripples out of trump (tariffs on Oct 1st) and/or renewed escalation from the protest movement in Hong Kong?
- China will be out for Golden Week from Tue Oct 1st & will not be back in until Tue Oct 8th, so things will quiet down in North Asia
- RBA rate decision on Tue Oct 1st – currently market is expecting them to remain on hold at 1.0%
- We also have the RBI due next wk, hard to know which way they will do given the massive stimulus efforts from the government last Friday – yet one thing for sure is, they likely have a dovish skew from a policy perspective to be support of the governments efforts
- Data wise it will be all about Final PMIs, US ISM / NFP / AHE, Aussie Retail Sales & Japan’s Tankan Survey, as well as UK’s GDP
- To catch this wk’s Macro Monday Click here…
- Don’t forget to bookmark & check our Daily SaxoStrats calls from the European morning session c. 09:00 CET
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.
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