Macro Monday Week 38: From Spiking Oil Prices to FOMC Decisions...
Global Macro Strategist
Summary: Light week ahead, key focus will be on Flash PMIs, RBNZ as well as rate decisions from the likes of the central bank of Mexico. Markets will still be busy digesting the hawkish cut from the Fed from last wk. Look for Fed Speak from Dovish Bullard & Non-Dovish George.
Mon 23 Sep 2019
A replay of the call is available HERE
Taking advantage of the light week ahead (at least from the known unknowns), for a short & quick MM this this week
Really all about post FED digestion, flash PMIs theme, RBNZ decision alongside the likes of Mexico which should be cutting rates by 25bp. Also few key governors speaking Draghi twice, Kuroda, Carney & Lowe. On Fed speak side, watch out for Bullard the Dove & George the Non-Dove
Lastly our MM instincts from last wk’s Monday open on fading the oil spike on the short side & going long US equity futures that were being sold off that morning, have played superbly. Onto the next one, patience & persistence are elements of consistent returns over time. Kudos to those that thought the same & acted accordingly.
Wishing everyone a healthy, phenomenal, smooth, profitable & lucky wk up ahead.
Summary of Prior Week:
- Geo Politics: Key focus was ME strikes & oil, which we covered last wk. Trump once again on the offence vs. the Fed… which had
FED: A hawkish cut, as no new adjustment seen for further cuts or hikes. It looks like they are expecting one more cut by year end & that seems to be exactly what is priced on Jan 20, Fed Fund Futures
- Key dates are Oct 30 (43.4%) & Dec 11(67%). Note repo spikes is linked to technical factors (bank reserves available for lending) & not similar to the spikes in GFC
- FI: Tighter for the wk, given cont. confusion from last two wk’s of decisions from the ECB & Fed
- FX: DXY higher for the wk to 98.51 +0.26%. ZAR, NZD, AUD & CNH sank the most vs. the USD – whilst the Yen & Rub were notable to the upside
- CMD: With yields lower for the wk, gold & silver regained their footing. Energy obviously higher given the epic open (+15% to +19%) from Mon
- Looks like our initial instincts to fade the oil pop, as well as buy the sold-off US EQ futures that Mon Asia mrn were on point & very profitable. Kudos to those that monetized
- EQ: EZ over Asia over the US performance wise for the bulls. The YTD numbers cont to be very strong
- Vol: +11.5% pop to 15.32
COT Report: [@Ole_S_Hansen]
- Again reversal on last wk’s reversal, this time we see USD net-longs move higher by a large +22% to $15.5bn ($12.7bn)
- Note the min 1yr extremes in NZD & BRL positioning, plus according to the CoT report the market is still heavily shortly sterling at c. -86K contracts
- Same trend as previously on Commodities, after the previous wk’s +3x increase in Net-Long exposure… we saw another large increase by +80% in the latest CoT reports. Quite impressive given the joint increase in USD net-longs..
- Flash PMIs | US GDP & PCE | RBNZ| ME / Energy | Countdown to Oct 1st | Repo Rate & Liquidity Funding
Central Banks (SGT):
- RBNZ 1.00% e/p (25) BoT 1.50% e/p (25) PH 4.00%e 4.25%p (26) MX 7.75%e 8.00%p (27)
Fed Speakers (SGT):
- Williams, Daly, Bullard (24/26), Evans, George (25), Kaplan, Clarida
- JP Bank Hol (23) Draghi (23/26) Kuroda (24) Lowe (24) Carney (26)
- US: Flash mfg. 50.3e/p Serv. 51.5e 50.7p, Richmond Mfg. Index, House Data, Final GDP 2.0%e/p, TB, Durable Goods, Personal Spending & Income
- CH: CB Leading Index
- EZ: Mfg. 47.6e 47.0p, Serv. 53.1e 53.5p, GER mfg. 44.6e 43.5p Serv. 54.3e 54.8p, GER Ifo Survey, M3 Money Supply, Private Loans
- JP: Flash mfg. 49.5e 49.3p, BoJ Mins, BoJ Core CPI, Tokyo CPI
- UK: Public Sector Net Borrowing, High Street Lending
- NZ: TB, RBZ, Daylight Savings Time Shift (28)
- AU: Flash mfg. 50.9p Serv. 49.1p
- CA: Wholesale Sales
Greater China Focus (GST: slides 10 to 12) – Focus on Oct 1st 70th National Day & Summary of Recent Measures Taken by China over last few quarters
Chartography & Price Action
No charts this wk
Don’t forget to bookmark & check our Daily SaxoStrats calls from the European morning session c. 09:00 CET