Asia Open: Things have turned a bit sour
MARKETS Sentiment has turned sour as unrest across China grows, including in some major cities and prominent universities. Protest of this extent is rare in the country and raises many uncertainties. The best scenario is further easing and reopening, but the speed at how things deteriorated over the weekend suggests the government needs to act…
China unrest : Uncertainty vs Pragmatism
The reported unrest in China is the key theme of the weekend headlines. The extent to which markets are impacted should be viewed through the lens of reopening prospects. Risk sentiment opens with a case of China derisking jitters amid untypical and growing unrest as citizens take to the streets to protest Covid zero. Any hopes…
Friday Forex Follies: The divergence in hawkishness of G10 central banks
This week, there is an evident divergence in the relative hawkishness of G10 central banks. While the Fed stepping down from a 75bp hiking pace to 50bp in December is wholly consistent with its projections, underwhelming survey data point to a faster-than-expected slowing in activity. A heavy calendar of Fed speakers next week – Williams…
Asia Open: Tokyo CPI surges + markets update
MARKETS European equities were stronger Thursday, Euro Stoxx600 up 0.5%. China equities were mixed: Hang Seng was up 0.8%, but CSI300 was down 0.4% as record covid cases have prompted wider spread lockdowns. Reopening policies have pivoted in China, which will be a gradual process. Covid control measures will vary across cities, but positive top-down approaches…
FOMC Minutes : From Jumbo to Extra Large Sends Markets Revelling
MARKETS Equities are revelling in the wake of the FOMC minutes after the Fed telegraphs a downshift from jumbo to extra-large rate hikes. Although we’ll see a slower pace of rate hikes, the terminal rate will be higher than markets had anticipated. Still, investors have welcomed a perceived reduction in uncertainty around the Fed’s terminal…
Stocks remain extremely sensitive to the US rate outlook
MARKETS US equities saw a bounce in another low-volume session as markets entered full holiday mode. Indeed the S&P 500 is up over 1% ahead of the Thanksgiving holiday on Thursday. The clear read-through here is that stocks remain extremely sensitive to the US rate outlook as US 10yr yields are down 7bps to 3.76%….
A lacklustre start to the holiday
MARKETS US equities had a lacklustre start to the holiday-shortened week, with headline indices grinding lower as growth underperformed. China moving away from its zero-Covid policy will not happen in a straight line but will provide a welcome excuse for anybody looking to take more money off the table. Fed speak is in focus, but if…
Investors reluctant to chase + Oil feeling the recessionary blue
MARKETS While most of the money-making trades of 2022 have been spun into reverse, with stocks and bonds re-correlating and rallying, Whether it’s the time of year or recession uncertainty, few seem inclined to chase the risk rally. Still, there is growing recognition that the consensus view of recession and earnings downgrades could face mitigation…
More evidence is needed to push forward central themes
MARKETS Even though the soft US CPI challenged the biggest conviction trades, markets are in a regime where more evidence is needed to push forward central themes. The soft October CPI print fueled Fed-pivot optimism, but Fed speakers pushed back last week by still seeing a higher terminal rate. China easing covid restrictions saw everything…
Markets are entirely in thrall to interest rates
MARKETS US stocks slid for the second day as Fed hawks continued to circle the wagons, repeatedly emphasizing their fight against inflation is far from done. So with investors beginning to question the validity of the post-CPI market moonshot, it effectively pushes out the process of getting constructive for next year. If the Fed raises…
