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European equity close: Modest moves with Spain leading the way

Tue, Nov 28, 2023 4:40 PM

<p>On the day:</p><ul><li>German DAX, +0.2%</li><li>France CAC, -0.2%</li><li>UK FTSE 100 flat</li><li>Spain's Ibex +0.7%</li><li>Italy's FTSE MIB, flat</li><li>Euro STOXX -0.3%</li></ul><p>US equities are currently at the highs of the day, with the Nasdaq up 0.4%.</p> This article was written by Adam Button at

US dollar decline accelerates as Waller takes a dovish turn

Tue, Nov 28, 2023 3:43 PM

<p>The latest comment from the Fed's Waller is:</p><ul><li>Good arguments that if inflation continues falling for several more months that you could lower policy rate</li></ul><p>Waller is generally a hawk so this is a real turn from him and the first hint from any Fed official that rate cuts are coming, or could come.</p><p>The market is already pricing in a 75% chance of a May rate cut but that certainly hasn't been endorsed by the Fed, until now. As a result, we're seeing material US dollar selling along with bids in bonds and buying in equities.</p> This article was written by Adam Button at

US November consumer confidence 102.0 vs 101.0 expected

Tue, Nov 28, 2023 3:00 PM

<ul><li><a href="" target="_blank" rel="follow">Prior </a>was 102.6 (revised to 99.1)</li></ul><p>Details:</p><ul><li>Present situation index 138.2 vs 143.1 prior (prior revised to 138.6)</li><li>Expectations index 77.8 vs 75.6 prior </li><li>1 year Inflation 5.7% vs 5.9% prior </li><li>Jobs hard-to-get 15.4 vs 13.1 prior</li></ul><p>This is a decent report. It's always better to see strength in the 'expectations' index.</p><p>“Consumer confidence increased in November, following three consecutive months of decline,” said Dana Peterson, Chief Economist at The Conference Board. “This improvement reflected a recovery in the Expectations Index, while the Present Situation Index was largely unchanged. November’s increase in consumer confidence was concentrated primarily among householders aged 55 and up; by contrast, confidence among householders aged 35-54 declined slightly. General improvements were seen across the spectrum of income groups surveyed in November. Nonetheless, write-in responses revealed consumers remain preoccupied with rising prices in general, followed by war/conflicts and higher interest rates.”</p> This article was written by Adam Button at

US November Richmond Fed composite manufacturing index -5 vs 3 estimate

Tue, Nov 28, 2023 2:59 PM

<ul class="text-align-start vertical-align-baseline"><li class="vertical-align-baseline">Prior month 3</li><li class="vertical-align-baseline">Richmond Fed composite manufacturing index -5 vs. 3 estimate</li><li class="vertical-align-baseline">New orders -5 vs -4 last month</li><li class="vertical-align-baseline">Services index 1 versus -11 last month</li><li class="vertical-align-baseline">Shipments -8 versus +9 last month</li><li class="vertical-align-baseline">Employment 0 versus +7 last month</li><li class="vertical-align-baseline">Wages 25 versus +29 last month</li><li class="vertical-align-baseline">Availability of skills needed 6 versus -1 last month</li><li class="vertical-align-baseline">Prices paid 3.08 versus +3.02 last month</li><li class="vertical-align-baseline">Prices received 1.97 versus +2.07 last month.</li><li class="vertical-align-baseline">Backlog of orders -23 versus -17 last month</li><li class="vertical-align-baseline">Capacity utilization -5 versus -6 last month</li><li class="vertical-align-baseline">Vendor lead time -4 versus -12 last month</li><li class="vertical-align-baseline">Local business conditions -14 versus -9 last month</li><li class="vertical-align-baseline">Finish good inventories 23 versus 23 last month</li><li class="vertical-align-baseline">Raw material inventory is 18 versus 23 last month</li><li class="vertical-align-baseline">Equipment and software spending -4 versus -2 last month</li><li class="vertical-align-baseline">Services expenditures 0 versus -13 last month was equipment</li></ul><p>Expectations components:</p><ul><li>shipments -1 versus a 12 last month.</li><li>New orders 6 versus 6 last month.</li><li>Employees 16 versus 15 last month. </li><li>Wages 50 versus 46 last month.</li><li>Availability of skills needed 11 versus 4 last month.</li><li>Prices paid 2.91 versus 3.45 last month.</li><li>Prices received 2.07 versus 2.08 last month.</li><li>Backlog of orders -16 versus -13 last month.</li><li>Capacity utilization 12 versus 8 last month.</li><li>Vendor lead time -12 versus -13 last month.</li><li>Capital expenditures 10 versus 1 last month.</li><li>Finish good inventories 10 versus 7 last month.. </li><li>Raw material inventory is 12 versus 11 last month.</li><li>Equipment and software spending 9 verse 6 last month.</li><li>Services expenditures -7 versus -10 last month.</li></ul><p>In October the index improved to back above the 0 line, but as dipped back into negative territory. Employment and softening prices paid are steady but prices received is lower. New orders remain steady but negative. Shipments moved into negative territory from positive territory last month.</p><p>For the full report <a href="" target="_blank" rel="nofollow">CLICK HERE</a></p> This article was written by Greg Michalowski at

Stocks Slip at Market Open; Mixed Yields Impact US Debt Market

Tue, Nov 28, 2023 2:43 PM

<p>The major US stock indices are opening near unchanged on the day. Yesterday, shares were little changed as well with:</p><ul class="text-align-start vertical-align-baseline"><li>Dow industrial average fell -56.68 points or -0.16% at 35333.48</li><li>S&amp;P index fell -8.89 points or -0.19% at 4550.44</li><li>NASDAQ index fell -9.84 points or -0.07% at 14241.01</li></ul><p>At the start of trading today, a snapshot of the market currently shows:</p><ul><li>DJI (Dow Jones Industrial Average): 35343.36, up by 9.88 points, an increase of 0.03%.</li><li>S&amp;P 500 (SPX): 4543.31, down by -7.13 points, a decrease of -0.16%.</li><li>NASDAQ Composite (IXIC): 14224.50, down by -16.52 points, a decrease of -0.12%.</li></ul><p>The small-cap Russell 2000 is trading down -8.86 points or -0.50% at 1792.09.</p><p>Looking at the US a debt market, yields are mixed/little changed:</p><ul><li>US 2-Year Treasury Note: 4.8626, increased by 0.6 basis points</li><li>US 5-Year Treasury Note: 4.3961, increased by 0.6 basis points</li><li>US 10-Year Treasury Note: 4.4001, increased by 1.2 basis points.</li><li>US 30-Year Treasury Bond: 4.5520, increased by 1.9 basis points</li></ul><p>The US treasury walks our 7 year notes at 1 PM ET today. Yesterday's 2 year auction was sloppy. The 5 year auction was acceptable but not great.</p> This article was written by Greg Michalowski at

Euro nears 1.10 for the first time since August

Tue, Nov 28, 2023 2:41 PM

<p>The euro is higher for the fourth day and is getting a tailwind from a broadly-weakening US dollar. <a href="" target="_blank" rel="follow">Bank of America made the case</a> for buying the euro in a report on trading themes for the year ahead.</p><p>The US dollar is weakening today despite modestly higher long-dated Treasury yields. Overall the moves are small and the market may be looking forward to a heavy dose of economic data and Fedspeak starting at the top of the hour with:</p><ul><li>Consumer confidence</li><li>Richmond Fed</li><li>Fed's Goolsbee</li><li>Fed's Waller (10:05 am ET)</li><li>Fed's Bowman (10:45 am ET)</li></ul><p>The latter pair are Fed hawks and any climb-down on the need for rate hikes or optimism about the path of inflation from them could weigh further on the dollar.</p> This article was written by Adam Button at

US Sept Case-Shiller 20-city home price index +0.7% m/m vs +0.8% expected

Tue, Nov 28, 2023 2:00 PM

<ul><li>Prior was +1.0% (revised to +0.8%)</li><li>Prices +3.9% y/y vs +4.0% expected</li><li>Prior was +2.2% y/y</li></ul><p>The US housing market has held up much better than elsewhere but there is some downward pressure from high rates.</p> This article was written by Adam Button at

A breakdown in OPEC would have broad macro effects

Tue, Nov 28, 2023 1:55 PM

<p>There is still a high chance that OPEC+ comes to an agreement on supply as higher prices are positive for all oil-producing countries. However, there appears to be a real sticking point over country quotas, particularly in Africa.</p><p>If the talks become heated enough, producer discipline could break down or Saudi Arabia could withdraw its 'lollypop' additional 1 million barrel per day cut. If so, there is the risk of material downside in oil.</p><p>If were were to see a breakdown in OPEC, oil could easily fall in to the $50s, which would be sharply disinflationary. I think it would be the nail in the coffin of the 'sticky' inflation argument. Aside from shorting oil, the obvious trades on it would be:</p><ul><li>Buying bonds</li><li>Selling the US dollar</li><li>Buying equities</li></ul><p>I could make the case for a half-dozen other trades as well (gold, for one should do well on rate cuts) but the overall theme would be to supercharge the moves we've seen in November.</p><p>Where would I put the odds? Maybe 1-2%... but that's higher than it was before <a href="" target="_blank" rel="follow">the latest OPEC headline</a>. </p><p>Right now, we're seeing some of that come into the FX market with the euro and pound both at the best levels of the day and some moderate USD weakness.</p> This article was written by Adam Button at

Bank of America offers up 9 trading themes for 2024, including US dollar softness

Tue, Nov 28, 2023 1:31 PM

<p class="text-align-start">Bank of America's fixed income and forex team is out with a report detailing its top themes for the year ahead.</p><p>1. Long EUR Rates</p><ul class="text-align-start"><li>Theme: "Disinflation is well underway" BofA says, suggesting it's time to buy eurozone bonds.</li><li>Implication: This suggests an expectation of a stable or decreasing interest rate environment in the eurozone, potentially making all investments in EUR attractive, see more on the euro below.</li></ul><p>2. Steeper US Curve</p><ul class="text-align-start"><li>Theme: Expectation of a steeper yield curve in the US, both in nominal terms and TIPS, as well as compared to EUR and AUD markets.</li><li>Strategy: Enter 5s30s steepeners, with the middle of the curve (belly) leading gains until the approach of the first rate cut.</li></ul><p>3. JPY and GBP Rates Underperformance</p><ul class="text-align-start"><li>Theme: They say the anticipated end to the Bank of Japan's yield curve control policy is not reflected in forward pricing. They also say the UK is facing structural inflation issues and pre-election fiscal risks.</li><li>Outlook: Japanese and British rates may lag behind, widening spreads.</li></ul><p>4. Short USD</p><ul class="text-align-start"><li>Theme: A weaker USD trend for 2024, driven by technical breakdown, US economic recalibration, China's recovery, and light market positioning.</li><li>Currencies Focused: Shorting USD particularly against the Euro and South African Rand.</li></ul><p>5. Short CNH vs CFETS Basket</p><ul class="text-align-start"><li>Theme: China's dependency on relaxed monetary policies leading to trade-weighted Chinese Yuan depreciation in most scenarios; underperformance against higher beta currencies.</li><li>Focus: Short positions in CNH versus the CFETS (China Foreign Exchange Trade System) basket.</li></ul><p>6. Short GBP/AUD</p><ul class="text-align-start"><li>Theme: The disparities in fiscal policy, current account, and Net International Investment Position outweigh the minor negative carry.</li><li>Outlook: A Chinese recovery would further support this position, with technical analysis indicating a head and shoulders top formation on the GBP/AUD chart.</li></ul><p>7. Long BBBs vs As, and Long Bank vs Corporate Spreads</p><ul class="text-align-start"><li>Theme: Favouring BBB-rated bonds over A-rated, and bank spreads over broader corporate ones, anticipating support from forthcoming rate cuts.</li></ul><p>8. Long BRL/MXN</p><ul class="text-align-start"><li>Theme: Brazilian Real vs Mexican Peso is seen as attractive due to their valuation, divergence in growth (versus consensus), and improving real rate differential.</li><li>Outlook: This Relative Value trade is viewed as insulated from global risk dynamics.</li></ul><p>9. Value in EM Local Bonds</p><ul class="text-align-start"><li>Theme: Post-last Fed hike, Emerging Market local currency bonds tend to yield highly positive returns.</li><li>Forecast: The highest total returns are expected in local currency bonds in Brazilian Real (BRL), Central and Eastern Europe (CEE), Israeli Shekel (ILS), South Korean Won (KRW), and South African Rand (ZAR), with an approximate 20% return.</li></ul><p>The overall theme is a peak in rates, an improvement in China and an overall risk-positive environment.</p> This article was written by Adam Button at

OPEC+ talks difficult, further delay in meeting possible - report

Tue, Nov 28, 2023 1:18 PM

<ul><li>OPEC+ talks are difficult and a further delay in the meeting is possible. A rollover of existing policy is also possible, according to four sources cited by Reuters.</li></ul><p>That's not good news for oil.</p> This article was written by Adam Button at

ForexLive European FX news wrap: Dollar steadies after slight drop, bonds stay in focus

Tue, Nov 28, 2023 12:36 PM

<p>Headlines:</p><ul><li><a href="">USD/JPY pares losses as dollar steadies itself on the day</a></li><li><a href="">The bond market returns to focus as Treasury yields near key level</a></li><li><a href="">ECB's Nagel: Rate hikes are not necessarily over</a></li><li><a href="">BOE's Ramsden: We are not making any commitments on where rates will be</a></li><li><a href="">Japan metal workers' unions also eye record base pay hike next year - report</a></li><li><a href="">OPEC reportedly to schedule an online meeting before talks begin later this week</a></li><li><a href="">Germany December GfK consumer sentiment -27.8 vs -27.9 expected</a></li><li><a href="">France November consumer confidence 87 vs 84 expected</a></li><li><a href="">Eurozone October M3 money supply -1.0% vs -0.9% y/y expected</a></li></ul><p>Markets:</p><ul><li>CAD leads, CHF lags on the day</li><li>European equities lower; S&amp;P 500 futures down 0.1%</li><li>US 10-year yields up 1.6 bps to 4.404%</li><li>Gold flat at $2,014.48</li><li>WTI crude up 1.1% to $75.70</li><li>Bitcoin up 0.4% to $37,200</li></ul><p class="text-align-justify">It was a light session for the most part with major currencies not doing a whole lot. The dollar was slightly softer early on, especially against the yen and antipodean currencies. But as the session progressed, it managed to turn things around with USD/JPY paring losses from 148.00 to 148.70 before hovering around 148.40 levels now.</p><p class="text-align-justify">Meanwhile, AUD/USD and NZD/USD were both looking poised for key technical breaks against the dollar as seen <a href="" target="_blank" rel="follow">here</a> but are now settling to be little changed on the day. The outlook is still rather bullish for both pairs but gains on the day are being checked back for now at least.</p><p class="text-align-justify">Besides that, other major currencies were little changed but the Canadian dollar is leading the way with USD/CAD dropping from 1.3600 to 1.3575 as oil prices are recovering with OPEC+ seemingly settling whatever dispute they had previously this week. WTI crude is up a little over 1% on the day to $75.70 currently.</p><p class="text-align-justify">In other markets, equities remain tepid with European indices holding lower and keeping the slight downside this week. And looking over to Treasuries, things are calmer but keep in mind that we have the 7-year notes auction coming up later and that could yet spark another rally in bonds before all is said and done today.</p> This article was written by Justin Low at

OPEC reportedly to schedule an online meeting before talks begin later this week

Tue, Nov 28, 2023 11:54 AM

<p class="text-align-justify">The online meeting will just be among OPEC members, believed to be scheduled for 1000 GMT on Thursday, ahead of the OPEC+ talks later in that day itself. It is said that the meeting will be for "internal matters" rather than about discussing output policy.</p><p class="text-align-justify">Thereafter, the JMMC meeting will take place at 1300 GMT before OPEC+ ministers will be meeting up at 1400 GMT for the full meeting. It looks like they are going to try to settle whatever rift that is going on, and that is helping oil prices push up today with WTI crude up 1% to $75.60 currently.</p> This article was written by Justin Low at

US-China tensions could take years to resolve, says Goldman Sachs CEO

Tue, Nov 28, 2023 10:35 AM

<ul><li>In an uncertain period, geopolitical tensions are a headwind for growth</li><li>US-China tensions could be more significant to the world than other geopolitical tensions</li></ul><p class="text-align-justify">He's not wrong there in a sense. All other geopolitical tensions tend to come and go and have short-lived impacts. However, a deepening divide in US-China relations will have a much bigger impact on the global economy especially in the years to come.</p> This article was written by Justin Low at

Eurozone October M3 money supply -1.0% vs -0.9% y/y expected

Tue, Nov 28, 2023 9:00 AM

<ul><li>Prior -1.2%</li></ul><p style="text-align: justify;" class="text-align-justify">Broad money growth in the euro area shrinks as expected, amid tighter financial conditions. The trend should continue and keep some pressure on the ECB as the economy will also slow down as a result.</p><p style="text-align: justify;" class="text-align-justify"><br></p> This article was written by Justin Low at

USD/JPY pares losses as dollar steadies itself on the day

Tue, Nov 28, 2023 8:47 AM

<p style="text-align: justify;" class="text-align-justify">The greenback has now pared losses across the board, sitting marginally higher against the likes of the euro and yen. Meanwhile, the antipodean currencies are down at the lows for the day and starting to cast some doubts over the potential technical breakouts <a href="" target="_blank" rel="follow">here</a>. The dollar is seeing more of a push and pull mood to start the week, with USD/JPY recovering from 148.00 earlier to 148.75 now:</p><figure class="content-data__image" data-media-id="570d115c-e818-478c-baab-16bc9eb7e9d2"><img src="" width="1271" height="716" wrapper-class="media-center__image" data-src=""><figcaption class="figure-img__c"><div class="content-data__caption">USD/JPY vs US Treasury 10-year yields (%) daily chart</div></figcaption></figure><p style="text-align: justify;" class="text-align-justify">I don't see any major headlines to be driving the move, so this seems more like some pushing and pulling in flows ahead of month-end perhaps. That is certainly keeping things interesting on the week, with <a href="" target="_blank" rel="follow">the bond market also a key focus point</a> as 10-year Treasury yields near a major technical level.</p><p style="text-align: justify;" class="text-align-justify">If anything else, just be mindful of the 7-year notes auction coming up later in US trading.</p><p style="text-align: justify;" class="text-align-justify"><br></p> This article was written by Justin Low at

European equities show a softer tone at the open

Tue, Nov 28, 2023 8:15 AM

<ul><li>Eurostoxx -0.3%</li><li>Germany DAX -0.2%</li><li>France CAC 40 -0.4%</li><li>UK FTSE -0.3%</li><li>Spain IBEX +0.2%</li><li>Italy FTSE MIB -0.2%</li></ul><p style="text-align: justify;" class="text-align-justify">It's a softer tone for the most part as equities are continuing to ease this week, following four consecutive weeks of gains. US futures are also tilted slightly lower now with S&amp;P 500 futures down 0.1% on the day.</p><p style="text-align: justify;" class="text-align-justify"><br></p> This article was written by Justin Low at

France November consumer confidence 87 vs 84 expected

Tue, Nov 28, 2023 7:45 AM

<figure class="content-data__image" data-media-id="72b1bc0e-96dc-4f7a-9447-be42e380369e"><img src="" width="658" height="456" wrapper-class="media-center__image" data-src=""></figure><ul><li>Prior 84</li></ul><p>That's a modest improvement in household sentiment in France but the reading continues to sit well below the long-term average of 100. The survey shows an improvement in the overall standard of living but there are rising fears on unemployment, with the latter reading increasing from 19 in October to 27 in November - its highest since August 2021.</p><p><br></p> This article was written by Justin Low at

Eurostoxx futures -0.1% in early European trading

Tue, Nov 28, 2023 7:06 AM

<ul><li>German DAX futures -0.1%</li><li>UK FTSE futures -0.1%</li></ul><p style="text-align: justify;" class="text-align-justify">There is a lack of excitement in equities to start the new week and after the more tepid showing yesterday, stocks are not really looking to be up to much today as well. US futures are flattish, so that is not leaving much for European traders to work with at the moment. <a href="" target="_blank" rel="follow">All eyes are on the bond market</a> to see if that will provide a fresh catalyst for any moves this week.</p><p style="text-align: justify;" class="text-align-justify"><br></p> This article was written by Justin Low at

Germany December GfK consumer sentiment -27.8 vs -27.9 expected

Tue, Nov 28, 2023 7:01 AM

<ul><li>Prior -28.1; revised to -28.3</li></ul><p style="text-align: justify;" class="text-align-justify">German consumer sentiment barely improves going into the holiday season, with no signs of any sustainable and noticeable recovery. GfK notes that the mood is still characterised by uncertainty and concern" even as sentiment is stabilising somewhat.</p><p style="text-align: justify;" class="text-align-justify"><br></p><p><br></p> This article was written by Justin Low at

The antipodeans pile on the misery for the dollar to start the week

Tue, Nov 28, 2023 6:25 AM

<p style="text-align: justify;" class="text-align-justify">The dollar is struggling to start the week, not helped by a fall in bond yields yesterday. And despite more tepid risk sentiment, the aussie and kiwi are still able to take advantage of the dollar's softness. Both the antipodean currencies are now looking to firm up key technical breakouts above their respective 200-day moving averages against the greenback:</p><figure class="content-data__image" data-media-id="9e9d317f-d7b3-4b04-ad5c-cd0c493e24c1"><img src="" width="1269" height="718" wrapper-class="media-center__image" data-src=""><figcaption class="figure-img__c"><div class="content-data__caption">AUD/USD daily chart</div></figcaption></figure><figure class="content-data__image" data-media-id="ea22b15b-58f1-4bd9-b75e-7783a0d7e4c2"><img src="" width="1271" height="713" wrapper-class="media-center__image" data-src=""><figcaption class="figure-img__c"><div class="content-data__caption">NZD/USD daily chart</div></figcaption></figure><p style="text-align: justify;" class="text-align-justify">Those are notable technical developments with AUD/USD potentially targeting its June and July highs while NZD/USD could be looking next towards the April, May, and July highs. For now, there is still some ways to go before we see that panning out but <a href="" target="_blank" rel="follow">if the bond market plays ball</a>, the dollar might be susceptible to an extended decline and I can see the above levels coming into play.</p><p style="text-align: justify;" class="text-align-justify">Month-end trading will make things a bit trickier in the sessions ahead but as always, the technicals will provide a good guide in reading overall trading sentiment and where we might be headed next.</p><p style="text-align: justify;" class="text-align-justify">For now, keep a watchful eye on bonds as that will have spillover impacts to both the dollar and risk mood.</p><p style="text-align: justify;" class="text-align-justify"><br></p> This article was written by Justin Low at

A couple of light data releases in Europe as dollar stays vulnerable

Tue, Nov 28, 2023 6:12 AM

<p style="text-align: justify;" class="text-align-justify">The dollar remains in a vulnerable spot once again, with&nbsp;USD/JPY eyeing a potential drop below 148.00 and inching back towards a retest of the October low at 147.27. Meanwhile, the antipodeans&nbsp;are off to a strong start this week with AUD/USD and NZD/USD both climbing above their respective 200-day moving averages in sealing a firmer technical breakout.</p><p style="text-align: justify;" class="text-align-justify">With the bond market in focus, the dollar could be susceptible to further declines if the rally in bonds continue to keep up. That will be the key theme to watch ahead of month-end trading this week.</p><p style="text-align: justify;" class="text-align-justify">For today though, economic data releases won't help too much in Europe with little in terms of key data. German GfK consumer sentiment and Eurozone broad money growth are among the only notable releases but they aren't going to be market movers whatsoever.</p><p style="text-align: justify;" class="text-align-justify"><strong>0700 GMT - Germany December GfK consumer sentiment<br>0745 GMT - France November consumer confidence<br>0900 GMT - Eurozone October M3 money supply</strong></p><p style="text-align: justify;" class="text-align-justify">That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.</p><p style="text-align: justify;" class="text-align-justify"><br></p> This article was written by Justin Low at

Japan metal workers' unions also eye record base pay hike next year - report

Tue, Nov 28, 2023 6:02 AM

<p style="text-align: justify;" class="text-align-justify">After all the other talk of strong wage increases going into next year, Japan's labour council for metal workers is also said to be considering demanding a record hike to the monthly base pay ahead of the spring wage negotiations.</p><p style="text-align: justify;" class="text-align-justify">They are believed to be demanding an increase of at least 3% amid talks with major firms such as car and electronics manufacturers. However, the sources cited say that this is "not yet a done deal" and that "we are still at odds with each other over the extent of the pay demand". In any case, it still bolsters the narrative of strong wage pressures coming up for Japan going into March next year.</p><p style="text-align: justify;" class="text-align-justify"><br></p> This article was written by Justin Low at

The bond market returns to focus as Treasury yields near key level

Tue, Nov 28, 2023 5:19 AM

<p style="text-align: justify;" class="text-align-justify">The drop in yields yesterday was definitely a bummer for the dollar, coming off the back of 2-year notes auction yesterday <a href="" target="_blank" rel="follow">here</a>. For today, there will be a 7-year notes auction to watch out for as well. With that in mind, the key thing to be wary about in the bond market now is that 10-year yields are coming close to testing its 100-day moving average once again:</p><figure class="content-data__image" data-media-id="d38df24a-2793-4e18-a5e0-47aad2c77018"><img src="" width="1271" height="715" wrapper-class="media-center__image" data-src=""><figcaption class="figure-img__c"><div class="content-data__caption">US Treasury 10-year yields (%) daily chart</div></figcaption></figure><p style="text-align: justify;" class="text-align-justify">This was the level mentioned here yesterday:&nbsp;<a href="" target="_blank" rel="follow">The real test for the bond bond market can now begin</a></p><p style="text-align: justify;" class="text-align-justify">Amid the quieter and more mixed start to the new week, this is where things could really kick off and we see a broader and more sweeping move across asset classes.</p><p style="text-align: justify;" class="text-align-justify"><br></p> This article was written by Justin Low at

ForexLive Asia-Pacific FX news wrap: USD/JPY falls back under 148.00, briefly

Tue, Nov 28, 2023 4:36 AM

<p><br></p><ul><li><a href="">PBoC Governor Pan says China's economy continues to gain momentum, inflation bottoming out</a></li><li><a href="">Hong Kong hit by surging demand for cash: Highest Hibor rates in 23 Years</a></li><li><a href="">EBC's Lagarde and Lane are both speaking later today</a></li><li><a href="">China's Premier says willing to build closer supply chain linkages with all countries</a></li><li><a href="">Bank of England's Monetary Policy Committee (MPC) member Jonathan Haskel speaks today</a></li><li><a href="">More from RBA's Bullock - monetary policy is restrictive</a></li><li><a href="">Bank of England's Ramsden monetary policy to be restrictive for an extended period of time</a></li><li><a href="">RBA Governor Bullock's uncertainty on inflation and interest rates</a></li><li><a href="">China tightens export controls on rare earths - takes effect Friday</a></li><li><a href="">Beijing Stock Exchange shaken as index plummets 6%: major shareholders urged to hold</a></li><li><a href="">United Kingdom detects human case of pig flu</a></li><li><a href="">PBOC sets USD/ CNY central rate at 7.1132 (vs. estimate at 7.1432)</a></li><li><a href="">Japan business lobby to discuss negative impact of weak yen</a></li><li><a href="">PBOC is expected to set the USD/CNY reference rate at 7.1432 – Reuters estimate</a></li><li><a href="">Australia October Retail sales -0.2% m/m/ (expected +0.1%)</a></li><li><a href="">ECB President Lagarde signals faster end to bond purchases</a></li><li><a href="">UK shop price inflation slows to its lowest in over a year</a></li><li><a href="">Japan media: Groundbreaking for the end of BOJ negative interest rates has finally begun</a></li><li><a href="">Citi expects S&amp;P 500 to new heights in 2024</a></li><li><a href="">Australian weekly consumer confidence 76.7 (prior 74.7)</a></li><li><a href="">US economy faces a mild recession in first half of 2024 , Deutsche Bank projects Fed cuts</a></li><li><a href="">Volkswagen is to slash thousands of jobs - cost cutting citing low productivity</a></li><li><a href="">Forexlive Americas FX news wrap 27 Nov: US yields move lower and push the US dollar down</a></li><li><a href="">OPEC+ Meeting: Deepening oil cuts on the horizon says an unnamed source</a></li><li><a href="">US stock indices close modestly lower</a></li><li><a href="">Trade ideas thread - Tuesday, 28 November, insightful charts, technical analysis, ideas</a></li></ul><p> <title></title> <style type="text/css"> @page { size: 21cm 29.7cm; margin: 2cm } p { color: #000000; line-height: 115%; text-align: left; orphans: 2; widows: 2; margin-bottom: 0.25cm; direction: ltr; background: transparent } p.western { font-family: "Liberation Serif", sans-serif; font-size: 12pt; so-language: en-AU } p.cjk { font-family: "NSimSun"; font-size: 12pt; so-language: zh-CN } p.ctl { font-family: "Lucida Sans"; font-size: 12pt; so-language: hi-IN } a:link { color: #000080; so-language: zxx; text-decoration: underline } </style> </p><p class="western" style="line-height: 100%; margin-bottom: 0cm"> <font color="#000000"><font face="Calibri, sans-serif"><font size="3" style="font-size: 13pt"><span lang="en-AU">T</span></font></font></font><font color="#000000"><font face="Calibri, sans-serif"><font size="3" style="font-size: 13pt"><span lang="en-AU">he JPY was once again a mover here during the session with USD/JPY and broader yen crosses falling. Japanese media carried a report expressing confidence that the end of the Bank of Japan's negative interest rate policy is approaching. It said that the Bank of Japan will determine whether to end the negative short-term rate policy as early as the first half of 2024. More on this report in the bullet points above. </span></font></font></font> </p> <p class="western" style="line-height: 100%; margin-bottom: 0cm"><font color="#000000"><font face="Calibri, sans-serif"><font size="3" style="font-size: 13pt"><span lang="en-AU">This helped the yen gain with USD/JPY as low as just beneath 148.00. Since then its chopped in a 20 or so point range and is circa 148.21 as I update. </span></font></font></font> </p> <p class="western" style="line-height: 100%; margin-bottom: 0cm"><font color="#000000"><font face="Calibri, sans-serif"><font size="3" style="font-size: 13pt"><span lang="en-AU">Also of note from Japan, and also yen supportive, was news that Japan's top business lobby, Keidanren, will discuss the potential negative impact of the yen's weakness on the economy at its meeting next month, on December 4. In the past, Keidanren has favoured a weak yen and called on the government to stave off sharp yen rises that make Japan's exports less competitive overseas. This shift by the lobby group to discuss the demerits of a weak yen highlights the new sensitivity in to the currency's movement and its impact on the economy.</span></font></font></font></p> <p class="western" style="line-height: 100%; margin-bottom: 0cm"><font color="#000000"><font face="Calibri, sans-serif"><font size="3" style="font-size: 13pt"><span lang="en-AU">In Hong Kong we had Reserve Bank of Australia Governor Bullock speaking as part of a panel on "Inflation, Financial Stability and Employment", along with the Bank of England Deputy Governor Ramsden and Bank of Spain´s governor / ECB monetary policy maker de Cos.</span></font></font></font></p> <p class="western" style="line-height: 100%; margin-bottom: 0cm"><font color="#000000"><font face="Calibri, sans-serif"><font size="3" style="font-size: 13pt"><span lang="en-AU">Bullock made hawkish comments but did say that the RBA has now to be a little more careful when using high interest rates to attack inflation without lifting the unemployment rate. Central Bankers tend to be confident that they can fine-tune monetary policy. Such confidence is often misplaced. We’ll see how Bullock and the RBA fare. The Bank next meet on December 5 and no change to the cash rate is expected. The February meeting is the one following and the chance of a rate hike will be high if the next official quarterly CPI report from Australia, due January 31 from the Australian Bureau of Statistics, is strong like the previous one in late October that precipitated the RBA November rate hike. </span></font></font></font> </p> <p class="western" style="line-height: 100%; margin-bottom: 0cm"><font color="#000000"><font face="Calibri, sans-serif"><font size="3" style="font-size: 13pt"><span lang="en-AU">Speaking of central banks, People’s Bank of China Governor Pan spoke, expressing confidence that inflation in China has bottomed out and promised continued accommodative monetary policy to help China achieve its economic growth goals in 2024. </span></font></font></font> </p><p><br></p><p><br></p><p><br></p><figure class="content-data__image" data-media-id="63d127b2-a399-4bd9-be95-b2650fe7994b"><img src="" alt="usdyen chart wrap 28 November 2023" width="1081" height="737" wrapper-class="media-center__image" data-src=""></figure><p><br></p><p><br></p> This article was written by Eamonn Sheridan at

Hong Kong hit by surging demand for cash: Highest Hibor rates in 23 Years

Tue, Nov 28, 2023 4:00 AM

<p>Demand for cash in Hong Kong is surging, leading to an extremely tight liquidity environment.&nbsp;</p><p>The Hong Kong Association of Banks reports that:</p><ul><li>one-month and six-month Hong Kong Interbank Offered Rate (Hibor) have hit their highest since 2000, i.e. highest in 23 years</li></ul><p>These rates are the basis for pricing mortgage rates in HK, but mortgage rates are capped. Caps can be raised though. If they do an already&nbsp;pressured property market will face another headwind.&nbsp;</p><p><br></p><figure class="content-data__image" data-media-id="88227e10-b70f-4e7c-a4c2-447b99bcdfae"><img src="" alt="Hong Kong typhoon" wrapper-class="media-center__image" data-src=""></figure><p><br></p><p><br></p><p><br></p><p><br></p> This article was written by Eamonn Sheridan at