APAC Global Macro Morning Brief – Happy Macro Wed 13 Nov 2019: Trump Smashes Fed, Urges Negative Rates

Macro 1 minute to read

Kay Van-Petersen

Global Macro Strategist

Summary:  Morning APAC Global Macro & Cross-Asset Snapshot


(Note that these are solely the views & opinions of KVP, they do not constitute any trade or investment recommendations of any kind.)


To see this wk’s
Macro Monday click here


APAC Global Macro Morning Brief

 

Happy Macro Wed 13 Nov 2019: Trump Smashes Fed, Urges Negative Rates



So full overnight session with the US back in class. US cash equities closed a touch higher at 3092 +0.16%, with the Nasdaq-100 about +10bp higher at 8264 +0.27%. DXY continued with the USD strength grind at +0.11% to 98.309

Commodities saw a mixed back with pullbacks in oil, silver & copper along the lines of -0.19% 16.77, -0.53% 62.06 & -0.69% 264.55 - yet bounces in the likes of Palladium by +0.85% 1670 and a sideways move in gold at 1456

Note the moves we have had in the different yield curves are huge, a lot of focus on JGBS which are pretty much flirting with parity… to give you context these puppies were south of -20-30bp just a few months ago

Asia morning sentiment seems to be equal to yesterdays’ bearish, with a hint of… “more bearish pixie dust”…

Key focus overnight was Trump’s speech, click here for full transcript. According to “The Donald” the US/CH ‘phase one’ deal is on track, yet if it does not go through, he is going to rain tariffs down like no tomorrow. He also goes full contact on the Fed, advocating lower rates

"Because remember, we are actively competing with nations who openly cut interest rates so that now many are actually getting paid when they pay off their loan — known as negative interest.  Who ever heard of such a thing? Give me some of that.  (Laughter.)  Give me some of that money.  I want some of that money.  Our Federal Reserve doesn’t let us do it." 

Its worth bearing in mind rest of the wk should see more heat & noise around the impeachment investigations, both from the Democrats, as well as the White House – with the former set to release the transcript from the first call between Trump & Ukrainian president, Zelensky

-

Meanwhile in Asia Wed’s morning we’ve seen a hell of surprise from the RBNZ which left rates unchanged at 1.00% when the majority of the market (73% implied prob. of a cut yest) was expecting a cut. We have had a pretty big squeeze in Kiwi Dollar by over +1.30% to 0.6414 as folks have clearly been caught short Kiwi

Last wk the kiwi was also at the bottom of the heap in performance vs. the USD across the G10 with -1.54% (granted it was a dollar smash wk with the DXY up +1.15%). Kudos to ‘Mr. Thailand’ who raised this contrarian take of the implications of an RBNZ that would stay put, on the back of the Q&A that we have on our wkly Macro Mondays

Next RBNZ meeting on 12 Feb 2020 may as well be light years away, there could be quite a bit of follow through in the relative world here. Next RBA is 3 Dec 2019, with a c. 14% chance of a cut. Here is the link to the latest RBNZ statement from this morning

-

Again likely the most important even this wk, post Trumps talk overnight will be Fed Chair Powell testimony on the US economy tonight. Here is a link to previous speech by Powell from 18 Sep 2019, to give some context of how he viewed the US & the world at the time


Namaste

-KVP


Today:

  • AU: Wage price index 0.5%a/e 0.5%p
  • NZ: RBNZ 1.00%a 0.75%e 1.00%p
  • EZ: GER Final CPI 1.1%e/p, Industrial Production, Bund Auction
  • UK: CPI 1.6%e 1.7%, House Prices
  • US: CPI 1.7%e/p, CORE 2.4%e/p
    • FOMC’s Powell testimony on the economy @ 00:00 SGT (11:00 ET)

 

Other:

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 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 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/en-hk/legal/disclaimer/saxo-disclaimer)

Saxo Capital Markets HK Limited
Rooms 2001-02, 20/F York House
The Landmark
15 Queen's Road Central
Hong Kong

Hong Kong S.A.R

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract) and Type 3 Regulated Activity (Leveraged foreign exchange trading) licenses (CE No. AVD061). Registered address: Rooms 2001-02, 20/F York House, The Landmark, 15 Queen's Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

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

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.