Friday Morning Coffee - Markets Update

Here's a summary of the key events and market movements as of 00:30 AM EST / 6:30 AM CET on February 17th, 2023:

• The USD/JPY pair rose to the highest level since January 6th, with the USD trading generally firmer. The 10-year UST yield also rose to the highest level since December 30th. This follows a statement from the US Fed's Mester on February 16th that she saw a compelling argument for a 50bps hike at the last meeting.
• Lenovo reported results.
• The Reserve Bank of Australia (RBA) Governor Lowe reiterated that further rate hikes will be needed in the months ahead, and the RBA will do what is necessary to return inflation to target. Australia sold A$500M in 4.25% Apr 2026 bonds.
• New Zealand's Finance Minister Robertson stated that there is a long road to recovery ahead in flooded areas, and it is not possible to quantify recovery costs yet.
• China's Politburo declared a victory in COVID-19 control and plans to increase the vaccination rate for the elderly. China's bank regulators asked banks to meet mortgage prepayment requests and crack down on the illegal use of consumer loans. The US Pentagon official Michael Chase is set to visit Taiwan in the coming days.
• The Bank of Japan (BOJ) is set to launch a central bank digital currency (CBDC) pilot program in April.
• North Korea's Foreign Ministry stated that planned South Korea-US military drills "will lead to increased tensions in the region."
• The Philippines Central Bank (BSP) Governor Medalla stated that the choice is a 25 or 50bps rate hike for the March meeting, following a 50bps rate hike at the February meeting.
• Singapore's January non-oil domestic exports rose 0.9% month-on-month but fell 25.0% year-on-year.
• Thailand's Q4 GDP fell 1.5% quarter-on-quarter and rose 1.4% year-on-year, missing expectations.
• The US January PPI for final demand rose 0.7% month-on-month and 6.0% year-on-year, beating expectations. The Fed's Mester, a FOMC voter, stated that risks to inflation remain and that she saw a compelling argument for a 50bps hike at the last meeting. A train containing one car of hazardous material derailed in Van Buren Township outside of Detroit.
• Bank of Canada (BOC) Deputy Governor Beaudry warned that without a sufficiently strong policy response, inflation expectations could drift, leading to inflation staying high and volatile for longer.
• In terms of market movements, the Nikkei 225 fell 0.8%, the ASX 200 fell 0.9%, the Hang Seng fell 0.7%, the Shanghai Composite fell 0.1%, and the Kospi fell 0.9%. S&P500 Futures fell 0.5%, Nasdaq100 fell 0.7%, Dax fell 0.6%, and FTSE100 fell 0.2%. Gold fell 0.9% to $1,836/oz, crude oil fell 1.2% to $77.58/brl, and copper fell 0.6% to $4.0980/lb.

The S&P500 Stock Heatmap - It was red hot all over the place in the previous trading session. - Powered by TradingView.

-Full transcript-

General Trend:

- USD/JPY rises to the highest since Jan 6th, USD trades generally firmer; 10-year UST yield rises to the highest since?Dec 30th?[**Reminder Feb 16th (US) Fed's Mester (FOMC voter) said: Saw compelling argument for 50bps hike at last meeting]

***Headlines/Economic Data***

Australia/New Zealand

-ASX 200 opens -0.2% at 7,391

-(AU) Reserve Bank of Australia (RBA) Gov Lowe: Reiterates expect further rate hikes will be needed in the months ahead; RBA will do what is necessary to return inflation to target

-(AU) Australia sells A$500M v A$500M indicated in 4.25% Apr 2026 bonds; Avg Yield: 3.455%; bid-to-cover: 4.22x

-(NZ) New Zealand Fin Min Robertson: Long road to recovery ahead in flooded areas, not possible to quantify recovery costs yet

China/Hong Kong

-Hang Seng opens -0.1% at 20,958

-Shanghai Composite opens -0.1% at 3,244

-(CN) China Politburo: Declare a victory in COVID-19 control; To increase vaccination rate for the elderly

-(CN) China bank regulators ask banks to meet mortgage prepayment requests and crack down on illegal use of consumer loans – press

-(TW) US Pentagon official Michael Chase [top China official] to visit Taiwan in the coming days – FT

-(CN) China PBOC sets Yuan reference rate: 6.8659 v 6.8519 prior

-(CN) China PBOC Open Market Operation (OMO): Sells CNY835B in 7-day reverse repos v CNY487B prior; Net injects CNY632B [record high] v injects CNY34.0B prior

Japan

-Nikkei 225 opens -0.8% at 27,484

-(JP) Japan Industry Min Nishimura: No fixed schedule for cabinet decision on approval of nuclear power plant operation extension

-(JP) BOJ Uchida: To launch CBDC pilot program in April

Korea

-Kospi opens -1.1% at 2,447

-(KR) North Korea Foreign Ministry: planned South Korea-US military drills "will lead to increased tensions in region" - KCNA

Other Asia

-(PH) Philippines Central Bank (BSP) Gov Medalla: The choice is 25 or 50bps rate hike for the Mar meeting [raised rates by 50bps at Feb meeting]

-(SG) Singapore Jan Non-oil Domestic Exports M/M: +0.9% v -1.0%e; Y/Y: -25.0% v -21.9%e

-(TH) Thailand Q4 GDP Q/Q: -1.5% v +0.6%e; Y/Y: 1.4% v 3.6%e

North America

-(US) JAN?PPI?FINAL DEMAND M/M: 0.7% V 0.4%E; Y/Y: 6.0% V 5.4%E

-(US) Fed's Mester (FOMC voter): Risks to inflation remain; Saw compelling argument for 50bps hike at last meeting

-(US) A train containing one car of hazardous material derailed earlier on Thurs in Van Buren Township [outside of Detroit] – US press

-(CA) Bank of Canada (BOC) Dep Gov Beaudry: Without a sufficiently strong policy response, a drift in inflation expectations could occur and open the door to inflation staying high and volatile for longer

Europe

-(RU) Russia to keep crude oil export volumes in Mar - Russian media

Levels as of 00:20 ET / 6:20 AM CET

- Nikkei 225, -0.8%, ASX 200 -0.9% , Hang Seng -0.7%; Shanghai Composite -0.1% ; Kospi -0.9%

- Equity S&P500 Futures: -0.5%; Nasdaq100 -0.7%, Dax -0.6%; FTSE100 -0.2%

- EUR 1.0676-1.0632 ; JPY 134.81-133.81 ; AUD 0.6882-0.6832 ;NZD 0.6268-0.6215

- Gold -0.9% at $1,836/oz; Crude Oil -1.2% at $77.58/brl; Copper -0.6% at $4.0980/lb

Data provided by TradeTheNews.com

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The Trade Academy Team