A tale of two tapes
MARKETS It was a tale of two tapes overnight as the positive vibes from an earlier-than-expected China reopening narrative and a dovish RBA were unwound as US ISM andJOLTS data in the US came out stronger than expected, casting doubts on the anticipated Fed pivot. The quality of the October rally was on display, with…
Traders Are Not Expecting A Full Snap Reopening In China
Markets Asian stocks advanced as technology shares led a rebound in China’s equity market ahead of a much-anticipated policy decision by the US Federal Reserve. MSCI Asia Pacific Index jumped as much as 1.4%, set for its biggest gain in almost a week, as dip buyers helped lift China’s gauges from multi-year lows. China reopening…
50 of 75 bp for December is less important
MARKETS Investors are wisely pausing for thought ahead of what is expected to be another jumbo Fed rate hike while attempting to plot a Fed rate hike path well into 2023. With the 10y yield back above 4% and little fuel for the ‘Fed pivot’ narrative overnight, the market seems to be positioning for an…
More China Economic Woes
China Economic Woes China’s official PMIs signalled economic contraction across sectors in October. Although these data points are weaker than expected, it should be no surprise given those broad-based covid-related restrictions that remained in place during the party congress. China-related markets are starting the week on the back foot, with the Hang Seng China index…
Central Bank Downshifts and post-Congress Party Covid blues
MARKETS There has been a succession of central bank downshifts, adding to the “peak hawkishness” theme running through macro markets. And investors are entirely focused on these U-turns as peak rates get priced in. So, people don’t want to miss the stock market rally wagon, especially if the Fed conveys a similar policy downshift this…
Fed Pivots vs Cruel and Unusual Punishment
In a widely expected move, the ECB hiked by 75bps. It was interesting to note the less hawkish tone when they suggested less scope for further rate increases; hence the EURO is trading softer across the board. With the ECB’s less hawkish tone coming hot on the heels of the BOC’s smaller-than-expected hike, it should…
Uncertainty Looms Large Next Week
Uncertainty Looms Large Next Week as companies contributing to 48% of the S&P 500’s weighting will release earnings. (Markets+ UK +Oil+ Gold) US equities were weaker Thursday, S&P down 0.8%. US10yr yields are up 10bps to 4.23%, the highest since June 2008. The US yield-to-equity correlation is very harmful to stock pickers. It will remain…
Surging US yields and the USD sledgehammer stocks lower
MARKETS US equities were weaker Wednesday, with S&P down 0.7% on mixed earnings reports. US10yr yields up 12bps to 4.13%. UK gilts rallied slightly, even as UK home secretary Suella Braverman quit after a “technical breach” of security rules leading market participants to conclude that the UK government is in shambles. US stocks turned lower…
Buying Beta with a Balance Sheet + Oil
MARKETS US equities were stronger Tuesday, with S&P up 1.2% after better bank earnings. US10y yields are down 1bp to 4%. Gilts are relatively steady, where 10y UK Government yields are down 2bps. A choppy session for the E-minis overnight has made the upside breakout a little fuzzy. The chart still points to one consolidation off…
Stocks Capsize As UMich Survey Points To Higher Inflation
NO TURN LIKE A U-TURN Investors watching China will look for headlines from the weeklong Communist party congress that kicked off with a 2-hour long speech from President XI over the weekend. The speech did not usher in any dynamic new ideas for China politically or economically, nor was it expected to; it instead provided…
