Global Macro APAC Morning Brief

Macro 1 minute to read

Kay Van-Petersen

Global Macro Strategist

Summary:  Morning APAC Global Macro & Cross-Asset Snapshot


Happy Wed! - APAC Global Macro Morning

Wed 4 Sep 2019


O/N & Levels:

US got back in yest & disappointed on ISM mfg. which came in at 49.1a 51.2e/p, that overshadowed the Markit Mfg. PMI 50.3a 50.e 49.9p

Likewise on the ISM mfg. prices continued their contracting trend 46.0a 47.6e 45.1p, not exactly inflationary

And to top all that, FOMC member Rosengreen indicated he is not in the dovish camp for the Fed Sep 18 (19th Asia time) meeting. He still seems to be expecting the US to grow around 2%, which would be in-line with historical trend. Rosengreen view is that 70% of US economy is tied ot the consumer & the consumer is in good shape – so why rock the boat… better to save those bullets for when we need them (& he is not wrong)

Note Rosengren & George were the two abstainers at the previous meeting

Meanwhile we also had Bullard, who was flagging the need for 50bp cuts at the Sep 18 meeting.

AU retails sales missed -10bp a vs. +20bp e. And the RBA left rates unchanged… ELEC is expecting further deterioration & cuts in Oct & Dec – with the added caveat that even strong Aus jobs numbers are not going to stay their dovish hands

Equities were down across EU & US… SPX c. -70bp to 2906 lvls, VIX +3.6% to 19.66…. We now have Silver above the 19.00 handle… remember what we have kept saying on Macro Monday about silver’s convexity being to the upside? We are now 19.43… we were advocating buys from 14.90/15.00 lvls… Kudos to those that communicated this across to clients. Gold is still struggling it seems for a decisive break above $1550… yet feel this will come…

On the govies side we got UST, Bunds & JGBs at +1.46%, -71bp & -28bp…. Worth noting that things like Greece 10yr bond are at 1.60%... don’t forget the meta trend in dialogue with clients… the vast majority of people still do not fully appreciate the long-term structural imbalances in the system

Sterling continues to be in focus (check yest. piece from John Hardy, Peter Ganry & Ole Hansen here)…

On our weekly internal team call our Chief Economist & CIO Steen Jakobsen … was super bearish on the UK, sterling assets etc… he feels parity is very possible & it gets a lot worse before it gets better


Today:

Aus 2Q GDP 1.4%e 1.8%p, Eleanor Creagh is looking for further weakness behind the data

Worth keeping in mind that a beat would likely surprise mkt & could get a near-term squeezy in Aussie crosses - incidentally it was the best G10 FX o/n

We also have China Caixin Services PMI – remember Caixin mfg. had a strong beat on Mon (50.4 vs 49.8)

Bank of Canada rate decision will be hotly anticipated – question is not will Poloz turn dovish & join the global race to the bottom… its when? Recently inflation has been surprising to the upside… DollarCad is c. 1.3340

US watch out for two more FOMC voters Bullard & Evans… may look to counter Rosengreen’s comments


Other:


Plus also Peter Ganry's latest Equity update here
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/legal/disclaimer/saxo-disclaimer)
- Full disclaimer (https://www.home.saxo/en-mena/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S - Representative Office
Boulevard Plaza - Tower 1
30th floor, office 3002
Dubai Downtown, Burj Khalifa area
Dubai
UAE

UAE

Trade responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.