Sunday 29 April 2018

Week to Apr 27th

Monday April 23
After Friday’s fade non-US equities turned up again today, although this was largely due to currency weakness. Data for the day was rather mixed. SPX had the flattest day for a long time, up 0.3 points (0.01%) on the day, as US 10-year bond yields approached 3%, closing up 2bp at 2.98%, making a total of 17bp in the last four trading days. Even the GOOGL beat on earnings and revenue had little effect, a small after-hours spike that faded quickly.

USD was strong with DXY putting on 0.74% on the day, the best day this month. All currencies were down in dollar terms, as was Gold. Oil on the other hand was very volatile, moving in a 2.72% range to close 1.15% up on the day, its highest close this week.

Tuesday April 24
Today the US10Y finally hit 3%. This psychological roundpoint was generally given as the reason for a sharp market fade. SPX was down 1.72%, and tech lead the rout, with NDX down 2.57%. DAX, FTSE and NKY were also down in line. The Tuesday Turnaround was also seen in EUR, GBP, CAD and Gold, which advanced slightly, however AUD and JPY were very slightly down. CAT beat estimates and rose 4.62% pre-market, but then fell with the rest of the DJIA and ended up 6.2% down on the day. Oil had a bad day after Trump made remarks about Iran, giving up all previous days gains and then some, to close 1.78% down.

Wednesday April 25
Another reversal on Wednesday as markets recovered some of Tuesday’s losses, despite yields advancing further into 3% territory (closing up 4bp at 3.03%). NKY recovered all the previous day’s fall, thanks to a weaker yen. It was good day for USD. DXY advanced 0.52% and all currencies and Gold faded against it. Oil climbed again. BA and FB beat on earnings and revenue. The aircraft giant put on 4.19%. Facebook’s report was after the bell and it gapped up 8.47% on Thursday, leaving an island reversal.

Thursday April 26
As yields retreated from 3% (down 3.7bp on the day), equities continued to climb back up, with SPX and DAX recovering most of Tuesday’s losses, and NKY and FTSE going even further, after US Jobless Claims and Durable Goods beats at 1230. The four stocks we mentioned last week comprising nearly a quarter of NDX all duly delivered on earnings, pushing the tech index up by 100 points in after-hours trading.

The ECB held rates as expected, but cautious remarks from President Draghi sent EUR southward, pulling back over a cent. This was against a backdrop of further dollar advance as DXY added another 0.4%, and all currencies and Gold retreated further. GBP has of course been falling since BoE Governor Carney expressed doubts about a May rate hike last week. Oil was more or less flat on the day (down 0.2% at $68.19).

Friday April 27
To quote two pieces of T.S. Eliot, “April is the cruellest month” is probably not true this year, but his description of the world’s end can also be said for the end of this week (and nearly the month), that it ended “not with a bang but a whimper”. Unlike many previous Fridays, there was no sell off nor was there a ramp, and with little volatility, equities and Oil were flat on the day. The only exception was FTSE which directly reacted to GBP. NDX gave up the 100-point overnight boost, with even mighty AMZN giving up half its earnings spike.

Currencies were a little livelier. Although JPY hardly reacted to the BoJ rate decision, there was a strong reaction to the UK GDP miss at 0830. Sterling fell 1% on the day (making a fall of 4.18% in eight trading days), as hopes of a May rate hike further evaporated. This was against a background of a slightly retreating dollar despite the various US GDP/PCE beats (except for raw Q1 GDP). Gold and all the currencies were up, but yields continued south, down another 3bp. Even NZD posted the first green candle in nine trading days, despite first hitting a 2018 low.

Please note all figures and percentages given for daily movement on indices cover the entire cash and futures period in that day.


The dollar rebounded this week, and most currencies reversed their gains of the previous week. The kiwi receded most, so selling NZDUSD would have been the best forex trade. Indices were much flatter, with only NKY managing to move more than 1% on a weaker yen. Oil held onto last week’s stellar gains but didn’t move much further. The crypto-currency recovery continued strongly following last week’s gains, with once again ETH performing even more strongly than BTC.

Another strong week for the dollar, with DXY putting on 1.4%, its best week since the week after the Trump election, and at 91.53 its best level this year. All currencies gave up ground, and the best trade, like last week was to short NZDUSD. Indices were quiet this week, with only NKY moving more than 1%. Cryptocurrencies were also quiet as volatility continues to fall.

AUDUSD 0.7580 (-1.17%)
EURGBP 0.8797 (+0.38%)
EURUSD 1.2126 (-1.29%)
GBPUSD 1.3775 (-1.62%)
NZDUSD 0.7085 (-1.69%)
USDCAD 1.2827 (+0.58%)
USDJPY 109.02 (+1.28%)
DAX     12590 (+0.47%)
FTSE     7509 (+2.74%)
NIFTY   10692 (+1.21%)
NKY     22467 (+1.38%)
SPX    2670.7 (-0.01%)
GOLD  1323.25 (-0.94%)
OIL     67.96 (-0.09%)
BTCUSD   9022 (+2.02%)
ETHUSD 654.01 (+6.38%)

(Crypto prices are given as at 0000GMT Saturday, two hours after the other markets close.)

NEXT WEEK (all times are GMT)

This is the peak week of earnings, with 1492 companies reporting including all-important AAPL (as AMZN and GOOGL reported early last week. It is also packed with economic data (remember our calendar only reports medium and high volatility items), including the Fed Rate decision and NFP in the same week.

Monday April 30
Quite a few market closures today, China takes Labor Day early, and Japan, India and Hungary are closed for local holidays, so expect a quiet Asian session. The important news of the day is the German inflation print. DJIA component MCD (ranked #7 at 4.48%) reports before the bell.

Tuesday May 1
China takes an additional Labor Day today, along with most of Europe (but not the UK, who depoliticised the holiday some years ago to ‘Spring Bank Holiday’ and take it on the first Monday in May, ie next week. Trump’s infamous steel and aluminum tariffs come into force, except for exempted countries (Canada, EU and Australia are exempt). If NAFTA is not concluded by then (a strong likelihood), the Canada (and Mexico) exemptions are expected to continue. No surprises are expected from RBA Governor Lowe or BoC Governor Poloz, although Canadian GDP may cause a ripple. Otherwise the big news of the day is the AAPL earnings after the bell. Note the release is not usually immediate, but 25-30 minutes after the market closes to reduce AH volatility. SNAP and GILD also report then.

Wednesday May 2
Today is FOMC rate decision day, with a 93.3% expectation (per CME FedWatch) of a hold. Attention will therefore turn to the dot-plot and Chair Powell’s remarks. Expect USD positioning throughout the day. The ADP estimate is 200k, almost exactly the same as the NFP estimate of 198k. There are no other Fed speakers today, only hawkish Bundesbank President Weidmann. Cult stock TSLA reports after the bell.

Thursday May 3
Today is the peak day of the earnings season with 450 companies reporting, but only beleaguered camera maker GPRO is of any note. Today is the hiatus between FOMC and NFP so some volatility many ensue. ECB speakers are Hansson (07:00), Constancio (12:00) and Coeuré (13:30), although the speech by SNB President Jordan, a market we don’t normally cover, at 16:00 may be interesting now that EURCHF has finally recovered to its pre-Jan 2015 level. Poland and Japan are closed today.

Friday May 4
NFP is always important, but as always recently, the Average Hourly Earnings is the key to a June rate hike (or not). The YoY estimate of 2.7% is the same as last month’s actual print, whereas the MoM estimate is down to 0.2% (0.3% prev act). Any miss here could stall the dollar’s recent rally. Chinese giant (but not index member) BABA reports before the bell. CB speakers today: Dudley (hawkish, voter) at 16:00, Williams (hawkish, voter) at 19:00, Quarles (centrist, voter) at 21:30, and ECB (BuBa) Weidmann at 13:00. Japan is closed again today.

CALENDAR (all times are GMT). High volatility items are in bold

Mon Apr 30
00:00 EUR EcoFin Meeting (24h)
01:00 CNY China PMIs
02:00 AUD RBA's Governor Philip Lowe Speech
06:00 EUR Germany Retail Sales (MoM)
12:00 EUR Germany CPI (est 1.5% prev 1.5%)
12:30 USD PCE/Income/Spending
13:45 USD Chicago Purchasing Managers' Index
14:00 USD Pending Home Sales (MoM)
22:45 NZD Building Permits s.a. (MoM)
23:30 AUD AiG Performance of Mfg Index

Tue May 01
04:30 AUD RBA Rate Decision/Statement (est 1.5% hold)
08:30 GBP UK Markit Manufacturing PMI
08:30 GBP UK Mortgage Approvals
12:30 CAD Canada GDP
13:30 CAD Canada Markit Manufacturing PMI
14:00 USD ISM Manufacturing PMI/Prices Paid
14:00 NZD GDT Milk Index (time approx)
18:30 CAD BoC Governor Poloz Speech
20:30 WTI API Stock
22:45 NZD NZ Empl Change/Unemp/Participation/Labor cost

Wed May 02
01:45 CNY China Caixin Manufacturing PMI
07:00 EUR Non-monetary policy's ECB meeting
07:55 EUR Germany Markit Manufacturing PMI
08:00 EUR Eurozone Markit Manufacturing PMI
08:30 GBP UK PMI Construction
09:00 EUR Eurozone GDP s.a.
09:00 EUR Eurozone Unemployment Rate
12:15 USD US ADP Employment Change
14:30 WTI EIA Stock
15:30 EUR German Buba President Weidmann speech
18:00 USD Fed Rate Decision/Statement

Thu May 03
01:30 AUD Australia Building Permits (MoM)
01:30 AUD Australia Trade Balance/Imports/Exports
08:30 GBP UK Markit Services PMI
09:00 EUR Eurozone CPI (YoY)
12:00 EUR ECB Vice President Vitor Constancio speech
12:30 EUR ECB Coeuré Speech
12:30 USD Trade Balance
12:30 USD US Jobless Claims/Nonfarm Productivity/Labor Costs
12:30 CAD Canada International Merchandise Trade
13:45 USD US Markit Composite/Services PMI
14:00 USD US ISM Non-Manufacturing PMI/Factory Orders (MoM)

Fri May 04
01:30 AUD RBA Monetary Policy Statement
01:45 CNY Caixin China Services PMI
02:00 NZD RBNZ Inflation Expectations (QoQ)
07:55 EUR Germany Markit Services/Composite PMI
08:00 EUR Eurozone Markit Services/Composite PMI
12:30 USD US NFP/AHE/Unemployment/Participation
14:00 CAD Canada Ivey PMI
14:00 EUR Buba President Weidmann speech (time approx)
16:00 USD Fed William Dudley speech
17:00 WTI Baker Hughes US Oil Rig Count
19:00 USD FOMC Member Williams speech
21:30 USD Fed Quarles speech

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