Global Macro APAC Morning Brief - China, back in from Golden Week holidays Global Macro APAC Morning Brief - China, back in from Golden Week holidays Global Macro APAC Morning Brief - China, back in from Golden Week holidays

Global Macro APAC Morning Brief - China, back in from Golden Week holidays

Macro 1 minute to read
Kay Van-Petersen

Global Macro Strategist

Summary:  Morning APAC Global Macro & Cross-Asset Snapshot


 

Happy Macro Tue 8 Oct 2019

APAC Global Macro Morning Brief – China, back in from Golden Week

China finally back in after Golden Week & post the 70th Anniversary celebrations. Key focus will be next steps on US/CH trade front, as well as if strategy in HK changes with protestors.

KVP continues to believe that Trump is likely going to run a 2020 Re-Election campaign on Tariffs, so highly sceptical of any real deal happening - with that said, Trump did sign trade pacts with Japan yesterday.

 

Going back to China, bear in mind that second round of tariffs from the US on Chinese goods hits on Oct 15. A delay or cancellation of that would be viewed quite positively by the markets.

At the same time, a break up in talks – now that we are on the other side of the 70yr anniversary – could see decent -3% to -5% pullback in the S&P 500.

At the end of the day, based on the economic data out of the US last wk (with its slew of key misses), that pillar of US consumer strength is now coming under question.  

 

The (o/n) also had Fed Chair Powell speaking, whilst nothing was publicly said in regards to the economy or markets, he did wave the flag in regards to the independence of the Federal Reserve – no doubt a counter, to the constant barrage that has come from the White House on the need for the Fed to do more.

So far Powell has been reserved, respectful & eloquent in discussing Trump’s reach – perhaps not surprising given that Powell is a lawyer by training & earlier by profession. Still you cannot help but wonder what he’d love to say after a whiskey sour or three.


Cross-Assets Snapshot:


Reversal in Dollar Weakness that saw the likes of USDJPY 107.26 pop by +0.30% & the likes of the Aussie 0.6733 & Kiwi 0.6289 pull back by -0.56% & -0.49% respectively. The DXY closed at 98.9670 up +0.16% for the session. The Swedish kroner was the worst G10 performer with USDSEK up +0.78% to close at 9.9163

YTD the Swedish kronor is by far the worst G10 performer vs. the USD with a total return of -10.76%. The CAD & JPY continue to be the outliers on outperformance vs. the greenback at +3.92% & +2.10% in total returns.


On the emerging currencies front, the dollar steam rolled against Brazil & Turkey, with USDBRL 4.1074 +1.25% & USDTRY 5.8407 +2.34%. The latter had a lot of noise around Trumps lack of clarity on what the US 7 Turkey are doing around Northern Syria, and the implications for the Kurds (US allies)

US bond yields have quite a move o/n, after dropping lower & hitting a low of 1.5034% they closed close to the highs of 1.5648%, resulting in s a -0.30% pullback in US 10yr bond futures. Its worth noting the 2/10 yr curve has gone from c. -6bp a few weeks back, to steepening to these c. +9-10bp

This move up  in yields saw a text book pullback in Gold 1493 -0.74% & silver 17.42 -0.62%

US equities closed lower with the S&P 2939 -0.45%, despite a positive green session across the European equities for the longs. The VIX continues to be bid, with a c. +5% uplift to just under the 18 handle.

Focus today will be where do China equities go? The S&P is down c. -1.3% since China went off-line for Golden Week holidays

This early morning Tuesday, we have US equity futures flattish & Asia equity futures looking strong on the open.


Today:

  • CH: Caixin Services PMI also due at 52.1e/p
  • JP: Average Cash Earning, Current Account, Household Spending
  • AU: Consumer Sentiment Indicators, Note we also had daylights savings change in Australia over the wkd so they go ahead an hour (i.e. now 3hrs difference to Singapore, as opposed to 2hrs)
  • UK: Carney speaking at 12:10 SGT/HKT, 00:10 ET, Also have a few MPC members of the BOE speaking later  
  • EZ: German Industrial Production
  • CA: Housing Starts, Building Permits
  • US: Core PPI, Powell @ 01:50 SGT/HKT [13:50 ET], Evans @ 01:35 SGT/HKT [13:35 ET]


    4th Quarter Outlook is out:
    Taking Down The Killer Dollar

  • Please check out our latest quarterly which focuses on the key culprit that is sucking up all the oxygen in the global economy, the strong US dollar.

 

Other:

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 07

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
  • The rise of populism: Far-right parties will influence the future

    The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.

    Read article
  • Investing in China: Navigating Q1 amid economic challenges

    Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.

    Read article
Disclaimer

The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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/en-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

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 may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

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

The information or the products and services referred to on this site 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 are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

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