The Morning Hark - 20 June 2022
Today’s focus ……Fed Gov Waller’s “all in”, Macron majority woes and the week ahead
Daily roundup - all prices are at 7.40 BST with changes reflecting movement from midnight BST
Oil?- Brent and Crude August both up smalls on the day at 113.70 and 108.60 respectively holding steady after their steep sell off late last week. Friday’s sell off was centred around concerns on the global economy, fuelled by the various rate hikes we saw in the week and the knock on effect on global demand if a global recession were to materialise. Remember too that liquidity is shot in the market and we were going into a long weekend in the US so a large part of the move could have been attributed to a paring of risk going into the weekend. The flip side of demand concerns still remains positive for oil with supply continuing to be affected by the unrest in Libya, the conflict in Ukraine which has all but cut off Russia’s oil exports, OPEC’s ability to reach their targets for higher output given the load is being spread across all producers, some of whom struggle to match their existing output targets, add to that the US SPR which continues to be depleted but at some point in the future will have to be replenished. Lots of supply side concerns there to be getting on with. I guess China remains a key piece to this puzzle and how and when it emerges from Covid lockdowns fully will play a large part in the oil prices’ future trajectory.
EQ?- Asia markets continue to go their separate ways with the Nikkei and the Kospi both down. Nikkei down just under one percent at 25,770 with the Kospi down over one percent to 315 with the heavily skewed Samsung selling off is the major reason. However, the Hang Seng, which continues to have a life of its own, is up smalls at 21,050. The support for the market is coming from the housing sector with measures by the authorities seen helping the after two local governments offered vouchers to help with down payments for home purchases. As an aside China kept their benchmark loan prime rates unchanged.?
The US stock futures indices both steady in the Asian session with the Nasdaq and S&P at 11,375 and 3,690 respectively. Remember today is a US holiday.?
Gold?- Gold futures flat overnight at 1846. We are sitting on our 1845 trading pivot we have spoken about of late. Seems the range around it is 1835 which opens up the downside with 1861 similarly for the topside.
FI?- Yields steady across the board in Asia after Friday saw a calmer day in the space after Thursday’s carnage. With the US bond market closed the US futures are steady. Equally, the European futures are all showing little change. The German 10y bund closed 1.658% on Friday with its Italian equivalent at 3.581 keeping the spread below the 200bp mark.?
FX?- Similar scenes in the FX space with little of major note. The USD Index down a touch at 104.41 with USDJPY flat at 134.85. The CHF remains strong after last weeks shock 50bp hike from the SNB with it remaining near its recent lows at 0.9660 versus the USD And 1.0170 versus the EUR. With stocks steadying the risk proxies have gained over half of one percent with the AUD and NZD up smalls to 0.6975 and 0.6340 respectively. The EUR steady above 1.05 and GBP looking the weakest of the bunch at 1.2240. USDCNH also had a move weakening half of one percent to 6.68 with no real news driving the move other than rumours of a lockdown easing.?
Others?- Well as we flagged on Friday the weekend started with the test and break of our psychological levels for Bitcoin and Ethereum at 20,000 and 1000 respectively with the pair notching up new recent lows at 17,600 and 880. Both have since recovered with Ethereum recapturing its level at 1080 but Bitcoin has seen several attempts to recapture and stay above its level fail with it trying again now trading at 20,070. Having captured these levels is the market now satisfied that the downside move is over? With the fallout from the Celsius and Three Arrow Capital still far from settled and clarity surrounding any liquidity event remaining it still feels like the the lows are not quite in yet. As a note, the Celsius liquidation event level appears to be around the 13,500 for Bitcoin after additional collateral was posted. One aside regarding El Salvador, where Bitcoin is legal tender and whose treasury became a big buyer of the coin, where its CDS 5y has blown out from 400 to over 3000 in little over seven months as pressure builds on the country’s mark to market. Obviously, a large chunk of this move has been since we broke the 40,000 level where the country first started to invest. All in all, for now, crypto still feels a sell on rallies story.?
Somewhat surprisingly, and certainly gone under the radar with at the general market carnage of late, President Macron lost his parliamentary majority with his Ensemble reaching 245 seats falling well short of the 289 seats needed. The king maker would appear to be the moderate right wing LR party. There was no immediate reaction from the EUR although, as we know, political uncertainty is never good for a currency in the long term.
As we highlighted on Friday there was some weekend news to look out for the highlight of which was Fed Governor Waller whose money line was that The Fed was “all in” on re-establishing price stability and that he would support a further 75bp hike for the Fed’s July meeting if economic data comes in as he expects over the coming weeks. Quite a strong commitment from a Fed Governor to make and could be a precursor to the general theme we get this week from all the post FOMC Fed speakers with Chair Powell’s double testimony to the Senate and House the highlight.?
As for today, we have nothing other than a raft of central bank speakers. Fed’s Bullard speech is on interest rates and inflation so more of the same we would imagine. The ECB speakers will be looked upon to add colour to the anti-fragmentation tools which came to the fore last week on the back of the widening of borrowing cost spreads across the region and of course the rate hiking profile ahead. Similarly for the BoE the “growth v inflation” debate will continue to rage and if there is appetite for a 50bp hike in the upcoming months on the back of their 11% inflation forecast.?
Week ahead highlights include the BoJ minutes where we may get some discussion on the continuation of the yield curve controls policy and why “currencies” was included in the BoJ statement for the first time. UK inflation where we shall see how quickly we can move to the?Bank’s 11% target! Later in the week we also have Canadian and Japanese CPI and all the major economies flash PMIs which will be scrutinised for any weakening and flipping of the 50 level. Russian bond default news could appear later in the week as we get to the end of the 30 day grace period following the non-payment assessment of the interest payments made at the end of May. Finally of course all the various central bank speakers will hopefully shed some light on their thoughts on the macro landscape.?
???The main highlights for the week ahead in terms of data and speakers:?
Monday?
Fed Speakers
ECB Speakers
BoE Speakers
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Tuesday?
RBA Gov Lowe Speaks?(01.00 BST)
RBA Minutes?(02.30 BST)
Canada Retail Sales MoM Apr?consensus 0.8% vs previous 0% (13.30 BST)
US Existing Home Sales May?consensus 5.39m vs previous 5.61m (15.00 BST)
BoE Speakers
Fed Speakers
?
Wednesday
BoJ Minutes (00.50 BST)
UK Headline Inflation Rate YoY May?consensus 9.1% vs previous 9% (07.00 BST)
UK Core Inflation Rate YoY May?consensus 6% vs previous 6.2% (07.00 BST)
ECB Non-Monetary Policy Meeting?(08.00 BST)
Canadian Headline Inflation Rate YoY May?consensus 7.5% vs previous 6.8% (13.30 BST)
Canadian Core Inflation Rate YoY May?previous 5.7% (13.30 BST)
BoE Speakers
ECB Speakers
Fed Speakers
?
领英推荐
Thursday
AUD S&P Manufacturing PMI Flash Jun?previous 55.7 (00.00 BST)
AUD S&P Services PMI Flash Jun?previous 53.2 (00.00 BST)
ECB General Council Meeting?(08.00 BST)
German S&P Manufacturing PMI Flash Jun?consensus 54 vs previous 54.8 (08.30 BST)
German S&P Services PMI Flash Jun?consensus 54.5 vs previous 55 (08.30 BST)
EU S&P Manufacturing PMI Flash Jun?consensus 53.9 vs previous 54.6 (09.00 BST)
EU S&P Services PMI Flash Jun?consensus 55.5 vs previous 56.1 (09.00 BST)
UK S&P Manufacturing PMI Flash Jun?consensus 53.8 vs previous 54.6 (09.30 BST)
UK S&P Services PMI Flash Jun?consensus 53 vs previous 53.4 (09.30 BST)
US S&P Manufacturing PMI Flash Jun?consensus 56.4 vs previous 57 (14.45 BST)
US S&P Services PMI Flash Jun?consensus 53.5 vs previous 53.4 (14.45 BST)
Fed Speakers
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Friday
Japan Headline Inflation Rate YoY May?previous 2.5% (12.30 BST)
Japan Core Inflation Rate YoY May?consensus 2.1% vs previous 2.1% (12.30 BST)
UK Retail Sales MoM May?consensus -0.9% vs previous 1.4% (07.00 BST)
German IFO Jun?consensus 92.9 vs previous 93 (09.00 BST)
RBA Gov Lowe Speaks?(12.30 BST)
Michigan Consumer Sentiment Final Jun?consensus 50.2 vs previous 58.4 (15.00 BST)
ECB Speakers
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Good luck.
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???Articles discovered on?Harkster ?or social media?exploring some of the current key macro themes in more depth:
FOMC
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ECB
ZeroHedge?-?Lagarde Capitulates As The Euro-Zone Divides
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BoJ
Stephen Kirchner?-?BoJ policy board maintains steady policy 8-1, dovish dissent from Kataoka
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BoE
Duncan Weldon?-?5 Takeaways from the Bank of England
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???Top 5 trending links on Harkster yesterday:
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