Week to Apr 9th

ISM Services PMI beat, Further all time highs, Dovish Fed

MY CALL THIS WEEK : SELL EURGBP

A strong US Services PMI beat started another positive week as stocks drifted up, helped by dovish FOMC minutes. It was moderate but solid risk-on, with NDX outperforming and DXY declining smoothly all week, helping Gold. SPX and DJI, unlike RUT and NDX posted new all-time highs, as did DAX and the MCSI World Index. Yields ranged finishing down but in last week’s range, as did Oil.

Next week is the start of earnings season, with JPM, C and GS leading the way as always. In practice surprises are unlikely, but with markets at elevated levels, the risks are to the downside. Before earnings comes US inflation on Tuesday. The estimate is up on the last month, and a beat could cause taper concerns.

Mon Apr 5

Friday’s rally continued with even further vigor today helped by the ISM Services PMI beat. SPX was up 1.44% and NDX even further. Europe was closed but DAX futures hit an all-time high The safe haven dollar was down. Yields were slightly down, and surprisingly so was Oil. Gold was flat on the day.

Tuesday April 6

US market were slightly off today, rotating into Europe to post an ATH for SX5E, the first since the pre-pandemic high over a year ago. Of the major indices, only FTSE is still below the Feb 2020 level. The dollar fell again, pushing Gold up. Bonds were also up, and Oil recovered somewhat.

Wednesday April 7

A flat day throughout asset class land, with equities, gold, oil and the dollar, although both all showed a slight blip upwards after the dovish FOMC minutes. FTSE advanced on a weaker dollar, but both DAX and SX5E retreated.

Thursday April 8

The Fed message had more effect today, with another rally across the board. DAX and now the MCSI World Index posted all-time highs. The dollar duly fell pushing Gold up again, and yields down. Oil was flat on the day.

Friday April 9

In a move similar to the previous Friday, markets rallied hard into the close, with for once, DJIA outperforming NDX, after four days of tech outperformance, and posting a new ATH, as did the MSCI World. The dollar reversed up after declining all week. Gold, bonds and Oil were all down.

WEEKLY PRICE MOVEMENT

A week of rotation back into NDX made it the top index, up 3.87%. The top forex pair was EURGBP up 1.95%. Cryptos were fairly flat (by their standards, ie under 5%), and FANG again outperformed NDX as a whole.

My strategy of the most extreme pair last week worked, but hardly at all, up 0.03%, taking the total to -1.03% 9/13 wins. I will try it again and sell EURGBP hoping for a reversion to mean.

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)

• Q1 Earnings season opens
• US inflation expected to rise
• Early Chinese GDP
• US Retail Sales, German inflation

Monday April 12

As is often the case, a quiet Monday with no US releases.

09:00 Eurozone Retail Sales (YoY e-5.7% p-6.4%)

14:30 BoC Business Outlook Survey

17:00 Fed Rosengren speech

18:00 US Monthly Budget Statement(Mar)

Tuesday April 13

The US inflation reports dominates today, too high and it might worry traders that the Fed may tighten policy.

02:00 China Imports/Exports/TB

06:00 UK Mfr/Ind Production

06:00 UK GDP

08:00 UK NIESR GDP Estimate (time approx.)

09:00 Eurozone ZEW Economic Sentiment

09:00 Germany ZEW Economic Sentiment

10:30 DE10Y Bond Auction (time approx.)

12:30 US CPI (YoY e1.6% p1.3%)

Wednesday April 14

Earnings season opens today, as usual with JPM first out of the gate. WFC and GS also report today. Markets are closed in India.

00:30 Aus Westpac Consumer Confidence(Apr)

01:00 RBNZ Rate Decision/Statement (e0.25% hold)

09:00 Eurozone Industrial Production s.a. (MoM)(Feb)

18:00 Fed Beige Book

18:30 Fed Williams speech

Thursday April 15

The second day of earnings season has BAC, C and top Dow component UNH (7.32%). Today would normally be US Tax Day, but this year the filing deadline has been extended to May 17. There are rate decisions in S.Korea and Turkey.

01:00 Aus Consumer Inflation Expectations(Apr)

01:30 Aus NFP/UnEmp (NFP e35k p88.7k)

06:00 Germany CPI (e2% p2%)

12:30 US Retail Sales (Control Group e-0.9% p-3.5%)

12:30 Philly Fed Mfr Survey(Apr)

12:30 US Jobless Claims(Apr 9)

Friday April 16

There are Eurogroup and EcoFin meetings all day today.

02:00 China Q1 GDP (YoY e18.6% p6.5%) 

02:00 China Retail Sales/Industrial Production

09:00 Eurozone CPI

12:30 US Building Permits/Housing Starts

14:00 Michigan CSI (e88.9 p84.9)

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)

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