Sunday, 13 October 2019

Week to Oct 11th


Trade war hopes at end of week, GBP soars on UK/Ireland progress


Mon Oct 07
Trade tensions continued to keep equity markets flat, or slightly down today. DAX suffered from yet another poor German Factory Orders print, although it did beat estimates.

The dollar was slightly up, but it was not even, with a flat EUR, and a slight advance on CAD. Other currencies and Gold were down. Oil and yields were slightly up.


Tuesday October 08
A US move to restrict visas for Chinese officials connected to the Muslim Uighur detentions in Western China, although not a trade move itself, was seen as a bad sign in US-China relations, and markets fell This was despite an announcement from Fed Char Powell that the Fed would recommence some QE operations. SPX was down 1.6% and other markets were similarly red. Risk assets Gold, JPY and bonds rose, and Oil fell in line with equities. DXY also ignored Powell, and was up across the board, with only NZD joining JPY in going green.



Wednesday October 09
Today’s trade war news was China’s offer to increase purchases of US agricultural goods and equity markets (and Oil) rose during the day, only to collapse over 1% suddenly after hours on a report that the US has added 28 Chinese entities to a trade blacklist. The FOMC minutes gave us nothing new, but mixed trade messages produce choppy markets, also seen in a flat DXY. All currencies (and Gold) were down except EUR, but the single currency is nearly 60% of the basket. Yields did not whipsaw, and rose gently all day.


Thursday October 10
The scheduled resumption of China trade talks, and a tweet from Trump saying he would meet Chinese VP Liu He on Friday was seen as positive, and equity markets (and Oil) were up again, and Gold, Bonds and JPY were down. Otherwise DXY was firmly down, especially after sterling rose nearly 2%, its best day for seven months, as progress appeared to be happening on the Irish border question, which is the sticking point for a Brexit deal. FTSE was therefore the only red index. US CPI printed in line with estimates and had little market effect. 


Friday October 11
All positive today on both sides of the Atlantic today. The US agreed to defer some tariffs which start next week, and described it as a ‘limited deal’. Optimism was high, and SPX ended 1.1% up after being 1.9% higher earlier in the day (ie some traders took profits).

After the British and Irish Prime Ministers said there is a “pathway to a possible deal”, the UK was even better. GBP added another 1.75% and FTSE was up 1.84%. FTSE expressed in USD (ie FTSE x GBPUSD) rose 4.76% in two days, the best two-day performance since the recovery immediately after the Brexit referendum. DOil was up in line. XY was down 0.38%, following the GBP ramp (which EUR the other player in Brexit joined). Only Gold, JPY and bonds (inverse to yields) were red against the dollar, as you would expect. CAD was particularly strong on a blowout (53.7k vs 10.0k) jobs report.



WEEKLY PRICE MOVEMENT
DAX outperformed this week adding 500 points, double the gains on other indices. We rarely see 2% weekly moves, never mind 3.24%, which was GBPJPY’s gain. Cryptos were fairly flat, and FANGs were variable, with AAPL outperforming.






Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.


NEXT WEEK (all times are GMT)
(Calendar High volatility items are in bold)

  • Earnings season opens
  • Trade war still in focus
  • Last chance for Brexit deal
  • China, UK, EU, Canada and NZ inflation

Monday October 14
US Bond markets are closed for Columbus Day (although the ZN future continues to trade). At some point this week, the US Treasury may release their ‘currency manipulation’ report. Canada is closed for Canadian Thanksgiving. There were local elections in New Zealand this weekend.

07:00 CNY Imports/Exports/Trade Balance
09:00 EUR Eurozone Industrial Production
12:10 GBP BoE Cunliffe speech


Tuesday October 15
Earnings season kicks off properly today, with a raft of reports from major players between 1040 and 1315, before the opening bell. The expected order is JNJ first, then UNH, JPM, GS, WFC and C. JNJ, UNH, JPM and GS together make up 17% of DJIA. As well as Bullard, we have Fed Bostic, George and Daly speaking today. Some US tariffs on China increase today.

00:30 AUD RBA Meeting Minutes
01:30 CNY China CPI (YoY e2.9% p2.8%)
08:30 GBP UK AHE/Unemployment (UE e3.9% p3.8%)
09:00 EUR Germany ZEW Economic Sentiment (e-33.4 p-22.5)
09:25 USD Fed Bullard speech
12:10 GBP BoE Vlieghe speech
14:30 NZD NZ GDT Milk Index
21:45 NZD NZ CPI (YoY e1.7% p1.7%)


Wednesday October 16
BAC report at 1045, before the bell today. After the bell we have NFLX and IBM. Fed Evans and Brainard speak today. There is a rate decision on KRW (25bp cut expected).

08:30 GBP UK CPI (e1.6% p1.7%)
09:00 EUR Eurozone CPI
12:30 USD US Retail Sales (Control Group MoM e0.4% p0.3%)
12:30 CAD Canada CPI (BoC Core YoY e1.9% p1.9%)
22:10 AUD RBA Debelle speech


Thursday October 17
Today and tomorrow sees the long-awaited EU Summit which is the UK’s last chance to do a Brexit deal, or ask for another extension, which PM Johnson does not want to do. If a deal is made, he then needs to secure a parliamentary majority to confirm it, and the UK parliament has a special session this coming Saturday to confirm or reject it. Earnings today from large but low-volatility players such as HON and PM before the bell. Fed Evans (again), Bowman and Williams speak today.

00:30 AUD Australia Jobs/Unemployment (Jobs e10.0k p34.7k)
08:30 GBP UK Retail Sales
12:30 USD US Jobless Claims
12:30 USD Philly Fed Manufacturing Survey
13:15 USD US Industrial Production
23:30 JPY Japan National CPI


Friday October 18
Today is monthly options expiration date, so expect additional volatility. DJIA components KO and AXP report before the bell, AMD report after the close. Some US tariffs on EU goods kick in today. Fed George (again), Kaplan, and vice-chair Clarida speak today.

02:00 CNY China Retail Sales
02:00 CNY NBS Press Conference
02:00 CNY China GDP
15:00 USD Fed Kaplan speech


This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here. This blog is supported solely by advertising, so if any of the ads interest you, please click on them. If you want notification when the blog is updated, please follow me on TwitterFacebookStocktwitsTradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.




Sunday, 6 October 2019

Week to Oct 4th


Disastrous US PMIs, FTSE largest drop since 2015, AUD falls on rate cut

From this week onwards, I have expanded the popular 12 chart table to 16, to cover DXY, NDX, NZDUSD and the Fed Funds Rate futures contract which is used to predict rate hike/cut likelihood. The scale is inverted, ie when the chart falls, rate cut expectations are increased.

Mon Sep 30
The reports of Chinese stock delisting were denied by the White House (BABA gapped up 2.35%), and indices were up on the last day of the quarter, although mutedly after the Chinese Manufacturing PMI (0145), German inflation (1200) and Chicago PMI (1345) all missed. The dollar was up again all currencies (and Gold), although only very slightly on CAD. Nevertheless Oil and yields were both slightly down. So not really a risk-on day.


Tuesday October 01
Today was the new month, and indices were rising gently until hit hard by the ISM Manufacturing PMI, which came in at 47.8 (contraction) instead of 50.1 (expansion) as estimated. The risk-off effect was strong, SPX fell 1.7% by the end of the day and other indices followed suit. The dollar reaction was instantaneous, DXY fell 0.26% in a minute, and not just with JPY although obviously this fell more (0.45%). All currencies except Brexit-troubled GBP were up, as was Gold. Oil and yields were down in line.


Wednesday October 02
Markets continued to tumble today after the ADP jobs miss at 1230, with SPX posting its second one day 1% drop for the first time this year. Elsewhere was just as bad, and no-deal rhetoric from UK PM Johnson at his party conference added to FTSE problems. The British index fell 3.2%, the worst one-day performance since January 2016. Currencies and commodities were also similar to Tuesday, with USD and Oil down, bond and Gold up. Once again GBP was flat.


Thursday October 03
The companion ISM PMI from the non-Manufacturing (ie services, transport etc.) sector at 1400 also missed today, with the worst print for three years. The market dived again, but today, a sharp move in Fed Funds rate futures showed a sharply increased likelihood (the bad is good factor), and indices recovered, with SPX up 0.8%, and worldwide equities also in the green. USD fell again on the news, and only partly recovered. Again all currencies, Gold and yields were up, and Oil was down, so the trend was still risk off.


Friday October 04
Today’s NFP came in at 136k, a little below the 140k estimate, but in line with Wednesday’s ADP print. The equity market was relieved that it wasn’t worse, and behaved like a beat, with SPX adding 1.4% and worldwide indices also rising. DXY had the flattest day of the week, with reversing JPY and Gold balancing slight gains in other currencies. Oil was up in line with equities, but yields continued to fall, although only slightly, a risk-on day of sorts.


WEEKLY PRICE MOVEMENT
Only NDX managed a positive week. The worst index was FTSE, down 3.65%. The biggest forex move was CADJPY, down 1.47%. After a few few of volatility, cryptos were very quiet. FANG stocks did particularly well in a bad week, with AAPL the clear winner.




Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.


NEXT WEEK (all times are GMT)
(Calendar High volatility items are in bold)

  • US and German inflation
  • FOMC and ECB minutes
  • Trade talks restart
  • Large CB speaker roster


Monday October 07
With a quiet week for news, attention will no doubt turn to politics, both in the US and UK. Fed Kashkari (2020 voter, dove) speaks today. The Powell speech is only, of all things, opening remarks at the screening of a movie about the life of Marriner Eccles, 7th Fed Chair in Utah. Markets are still closed in China. There is a rate decision on ILS.

05:00 JPY Japan Leading Economic Index
06:00 EUR Germany Factory Orders
17:00 USD Fed Chair Powell speech
23:01 GBP UK BRC Like-For-Like Retail Sales (YoY)


Tuesday October 08
The Powell speech today in Denver, CO is about the ‘new’ and ‘old’ economies. Fed Evans (voter, dovish) and Kashkari (again) speak today. BoE Governor Carney is at climate-related summit in Tokyo. Markets reopen in China.

01:45 CNY China Caixin Services PMI
04:10 GBP BoE Governor Carney speech
06:00 EUR Germany Industrial Production
12:30 USD US Core PPI
18:30 USD Fed Chair Powell speech


Wednesday October 09
Chair Powell’s tour continues today in Missouri, opening remarks again at a ‘community listening session’. More important is the release of FOMC September minutes relating to the last rate cut, and the reasoning behind it. The JOLTS job opening print is due today.

15:00 USD Fed Chair Powell speech
17:00 USD US 10-Year Note Auction
18:00 USD FOMC Minutes


Thursday October 10
US-China trade negotiations are scheduled to restart today in Washington. Although this is by no means final, any positive noises would probably lift markets. Fed Mester (2020 voter, hawkish) and Bostic (non-voter, centrist) speak today. A rate cut is expected on PEN.

06:00 EUR Germany Trade Balance
08:30 GBP UK Industrial/Manufacturing Production
08:30 GBP UK GDP (MoM Aug )
11:30 EUR ECB MPC Minutes
12:30 USD US Jobless Claims
12:30 USD US CPI (Core YoY e2.4% p2.4%) 
17:30 EUR ECB Lane (voter, dove) speech
21:30 NZD Business NZ PMI

Friday October 11
The week ends with a slightly livelier day. The Canadian jobs estimate of 40.2k is equivalent to 355k in US terms, (last month’s was equivalent to 716k!), as the US has 8.83 times the population. Fed Rosengren (voter, hawk), Kaplan (2020 voter, centrist) and Kashkari (again) speak today.

06:00 EUR Germany CPI (YoY e0.9% p0.9%)
10:30 EUR ECB De Guindos (voter, dove) speech
12:30 CAD Canada NFP/AHE/UnEmp (NFP e 40.2k p81.1k)
14:00 USD Michigan CSI (e92.0 p93.2)


This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here. This blog is supported solely by advertising, so if any of the ads interest you, please click on them. If you want notification when the blog is updated, please follow me on TwitterFacebookStocktwitsTradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.