APAC Morning Macro Brief – Happy Macro Fri 13 Dec 2019: Fri 13th = Boris UK Win + US-CH Deal
Summary: APAC Morning Global Macro & Cross-Asset Snapshot
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Happy Macro Fri 13 Dec 2019
APAC Morning Macro Brief: Fri the 13th sees UK Election Victory For Boris & US-CH Trade Deal
And people thought Friday the 13th was a scary, if you were positioned bearish coming into it, its likely going to be a tough day as it looks like a risk-on party & everyone is invited expect gold, silver, bonds, the yen, the swiss franc & volatility.
We seem to have gotten two big uncertainties out of the way in Global Macro: the UK Elections & the US-CH Trade Deal
The UK Elections:
The exit polls form overnight suggest that it’s a crushing defeat for Corbyn’s Labour & a smashing victory for Boris’ Conservatives/Tories.
With 650 seats up for grabs in parliament, 326 was the number needed for a majority government. Labour seem on track for 191, whilst conservatives seem set to have a whopping 368! In hindsight, the real kingmaker here was likely Nigel Farage, who announced wks ago that his part was not going to contest in areas vs. the conservatives – likely streamlining his would-be supporters towards Boris’s flag.
You would have to go back to the 80s to find a similar time when the Conservatives had such a majority in parliament – that’s right, the Thatcher era.
Sterling has had a field day, with its ascent seeing no restraint.
GBPUSD 1.3475 +2.39% this Asia morning, technically for the Thu session it was -0.275% to 1.3161. And yes, as we flagged in yesterday’s piece, just a few wks ago we were just under 1.2000. Special shout out to KD who not only loudly called out the Boris smashing victory but also cable’s ascent.
EURGBP 0.83027 -1.82% this Fri Asia morning, after a thu session that was +0.26% to 0.84567.
GBPJPY 147.43 +2.47%. GBPCHF 1.3274 +2.38%
So this likely means that next week should see the WAB (Withdrawal Agreement Bill) brought back to Parliament & passed with the new conservatives’ majority. Then it should be all about Jan 31 & trade negotiation talks with the EU in 2020.
US – China Trade Deal
So it looks like Beijing blinked in regards to still leaving some tariffs on the table – 100% no tariffs was always a principle point that they swore not to compromise on – then again, perhaps that was the plan all along.
In a nutshell it looks like China will buy agri from US farmers & Trump will scratch the Tariffs that were to come on this Sun & take the previous tariffs down by 50%.
Key issue from KVP would be for how long does this hold? Especially given the fact that the probability of phase 2 and/or phase 3 deals starts to get much lower, given the complexities around IP & enforcement.
Likely Focus Today:
At least two things…
Final official results of the UK elections – note the exit polls have historically been quite good at predicting the outcome & with such a healthy margin, its about as good in the bag as it can get. Likely we hear from Bojo & next steps.
Further digestion of US-CH trade news, next few session will determine whether this was the classic buy the rumor sell the facts or whether the Santa year end momentum takes over
Have a great, profitable & healthy close into the year everyone.
We’ll be back with regular briefs in the New Year, as combination of year-end lack of liquidity & people being off screen can lead to too much focus on what ends up being noise. Still well highlight any compelling opportunities that present themselves.
Happy Holidays, Merry Christmas & Safe Travels – enjoy the much deserved downtime with loved ones.
On The Radar Today:
- NZ: NZ Mfg. Index 51.4a 52.6p
- JP: Tankan Index
- UK: Consumer Inflation Expectations, CB Leading Index
- EZ: GER WPI
- US: Retail Sales, Import Prices, Business Inventories
- FOMC’s Williams speaking 01:00 SGT (12:00 ET)
- FOMC’s Williams speaking 01:00 SGT (12:00 ET)
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
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Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.