Upcoming Events:

 

Date:

1/08/2020

 
     

Events Date:

Event

Event Comments

 

US attack on Iran

*mkts pending Iran response for positioning, futures pare losses as Iran response seems over if no U.S. retaliation

*U.S. miliarty draft letter hints preparations to withdraw troops from Iraq in response to Iraqi vote

 

India US trade deal?

*India won’t join China backed regional trade agreement

 

Hong Kong protest

*if Chinese forces move in, will hit emerging market assets

 

Rebalancing

*traders monitoring equity to bond rebalance activity

11am

Trump presser on Iran

 

Jan

EU auto tariffs

*Trump to decide after trade investigations

*conflict with France increase likelihood of auto tariffs

06-Jan

PBOC RRR cut

*cut by .5 ppt

14-Jan

Fed REPO ops

*mkts monitor if fed scale back support, with current expectation of continued support, mkts will move if fed support fades

*support expected till Apr 15 tax date

15-Jan

US China phase 1 deal signing

*signing text translations approved, pending official signing in Jan

*signing is important as traders still wait for confirmation of signed deal

*will be signed after translation completed and verified in Chinese and English

31-Jan

Extended Extended Brexit deadline

 

Markets

Ticker

Comments

Macro

 

 

 

 

*IMF cites high corporate debt vulnerable for US and China

*US balance sheet is shrinking, but EU and China balance sheet still growing

*BoC highlights risks monitored <- economy capacity, inflation, wage dynamics, sensitivity to higher rates with elevated debt

*BIS says China, HK, Canada most risk of banking issues

Rates

 

 

 

TSY

*mkts scale back rate cut expectations

*Powell on hold comments didn’t lift rates

*traders closely watch comments of treasury purchase and unwind plans

*FED favouring  shortening balance sheet duration

*FED slowing hikes will avoid inversion repricing

*Fed balance sheet target estimate ~$1700 bb

(Powell: Between USD2,500-3,000bn within three to four years with mainly treasuries on balance sheet: mkts think a bit optimistic)

 

IHY

*central banks tighten, but balance sheet still expending

 

BTP

*Italy comment 2020 budget aim between 2% and 2.1% provide support

Equities

 

 

 

SPX

*hints of QE for equity repricing

*US Congress: traders monitoring hints of gov cooperation going forward

*Trump tweets: mkts pricing out tweets as not always indicative of actual reality

*Earnings: mkts believe 2019 projections pricing conservative levels already

 

FXI

*China ready for stimulus to offset tariffs, not going to stimulate property sector causing property stocks to sell off

FX

 

 

 

USD

*Mnuchin says no change to U.S. dollar policy as of now, but may in future

*speculation Trump operations  to sell dollar

 

MXN

*working to avoid Pemex downgrade, Pemex debt swap helping bid

*mkts think oil industry reforms not enough to help

 

EUR

*EUR inflation not expected to last

*ECB comments on options to help weak banking sector

*Trump could challenge trade as EUR devalues

*no solid bid expected until negative rates lifted

 

GBP

*drop as no deal risk reintroduced by PM

 

AUD

*drop with rate cut, employment data to deteremine further cuts

 

CNY

*most likely move back to within 6 range after trade deal

*CNY becoming petro ccy will faciliate CNY global use

*gains signal China goodwill on trade deal

 

CAD

*mkts start to price in cut, failed to bid on oil rally

Commodity

 

 

 

USO

*gs thinks oil will rebound, traders will eye economic data to confirm

*iran conflict cause oil bid

*US supply more than offset Iran output, ample US supply will cap price gains in foreseeable future

Credit

 

 

 

RATINGS (RATC)

*Ireland upgraded to AA- by S&P

*S&P upgraded Spain to A

*Fitch negative outlook on Chinese banks

 

 

 

COT Flows

S

*slight bid on soybeans

 

SPX, GBP

*slight bid

 

 

 

 

 

 

Central Banks

Announcement Date

Comments

FOMC

 

*unch as expected, dot plots show no cuts for 2020

*US China negotiations maybe key if further cuts

*mkts unwinding futher rate cut expectations

BoC

 

*unch as expected

*lack of tipping dovish comments have traders unwind bearish CAD bets for now

*fwd guidance hint direction can be either way

*bond mkts start to price in cuts as next move, traders think maybe overreaction

RBZ

 

*announcement of possible neg rate causes kiwi to fall

RBA

 

*RBA holds as expected

*mkts expect cut if US China trade deal breakdown

*indicate QE will only be considered when policy rate has been lowered to .25%

ECB

 

*unch as expected, restarts QE Nov

*QE may lossen ISIN limit restrictions in future

*Germany 50bb fiscal package, but not immediately

*cut as primary stimulus measure comments

BoE

 

*unchg as expected

*comments (from hawk) may cut 25 bps even if Brexit deal 

BoJ

 

*unch as epxected

*CB targeting low interest rates until 2020

     

Mkt News:

   

Norway wealth fund plans to remove emerging corporate bonds and linkers from investment, and sell off energy investments

China fintechs granted banking licences in Hong Kong, with eyes on New York and London

Antitrust probe on big tech

 

Brazil state owned banks have poetntial heavy losses from construction conglomerate scandal

China take over of Baoshang bank hs caused liquidity strain for bigger Chinese banks who are now more risk averse

IMF chief replacement: Jeroen Dijsselbloem, Kristalina Georgieva, or Olli Rehn <- Kristalina front runner

GS planning to buy E-trade or a bank

 

chatter Microsoft interested to buy Bloomberg

 

China tech stocks down as gov allocate less to tech investments