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Morning Brew September 19 2023
Erik Schafhauser
Senior Relationship Manager
Résumé: Markets Hibernating Yesterday but the Elephant in the Room Ahead
Good Morning
Markets seem to he in a holding position for the rate decisions starting tomorrow night and going into Friday.
Yields remain high with the 10 Year US at 4.30% and the USD Index is trading at 105.19. EURUSD is at 1.0677, GBPUSD 1.2375 and USDJPY 147.78 – clearly in intervention territory.
Kim put out a summary of the key levels in EURUSD, GBPUSD and the USD Index, EURUSD should hold above 1.0635.
US Equities basically refused movement yesterday and the three major indexes closed within 0.1% from Friday. Key mover was ARM which fell 4.5% after a broker downgrade. Asian shares were under pressure in the night as worries about developments in the Chinese property segment caused nervousness – also Japanese traders were apparently nervous about a report that TSMC saw lower demand. The report was from Friday but widely ignored. Soc Gen announced its strategy yesterday and found little love, shares lost 12% pulling European Banks lower.
China's holdings of US Treasuries fell for the fourth straight month in July, reaching the lowest level since June 2009. AllianceBernstein's Matthew Sheridan said it was a good time to buy the 10 year Bond now as he sees Yields falling nearly 2% .
Right now, the US 500 is trading at 4450, the GER40 15695 and the US Tech 100 NAS 15202.
Looking ahead, there are several elephants in the room:
- Rate decisions starting with China over night, followed by the US tomorrow evening
- Labor disputes with the UAW threatening to extend the strikes to more facilities
The current strikes have caused the most hours lost since the year 2000 - The US Government Lockdown by October if no solution is found.
- The restart of student debt repayments from October.
The big question will be how much money households will have to spend on consumption and that figure should decline due the above. We are also seeing a slowdown in the housing market as any changes to long term mortgages would cause higher rates to apply.
For today, EU Inflation, US Housing Data and the Canadian CPI are the key events, Oil and commodities are generally in focus after the strong increase in Oil to the highest level since November. Gold bounced from the 1,900. Range bound 1,900-1,950 and Silver held it`s decline at above 22.15 support. Could bounce to 23.50, copper looks to test the 382.
Key Events ahead:
Tuesday
- Data: EU HICP, US Housing Starts, CA CPI, Crude Stocks
Wednesday
- Data Japan Trade, China Rates, UK CPI, US FOMC Rate decision & press conference
Thursday
- Data Australia GDP. Swiss Sweden, Norway, UK and Turkey rate decision, US Initial Jobless Claims, Philly Fed and Home Sales,
Friday
- Data Japan CPI, UK Retail Sales, International PMI
Expiries
Physically Settled Futures
- CLV3 will expire 20 Sep 2023 at 15:00 GMT
- PLV3 will expire 21 Sep 2023 at 15:00 GMT
Expiring CFDs
- PLATINUMOCT23 will expire 20 Sep 2023 at 08:00 GMT
- AUS200SEP23 will expire 21 Sep 2023 at 12:00 GMT
Erik