Week to Feb 22nd

Four day week in US markets, Oil climbs for a second week, FTSE100 underperforms

Mon Feb 18

US markets were closed today for President’s Day (George Washington’s birthday), and SPX and bond futures were flat, as was Oil. However Asian markets were strong. The sentiment did not transfer to DAX, which was down. FTSE fared better after news of a firm post-Brexit Australian trade agreement, although it sold off at the very end of the day to end flat. Without US news, the dollar was directionless. DXY was down a mere 0.15%, with AUD and JPY up, but other currencies were up slightly.

Tuesday February 19

Despite an EPS beat WMT, US markets were only slightly up (DJIA was flat), with little reaction to the confirmation from President Xi that trade talks would continue in the US, after the sixth(!) round finished in Beijing. Other markets were down in their cash sessions but recovered in late futures trading to end roughly flat. DXY was down 0.29%, with notable moves up from all currencies and Gold, the exception being JPY which fell 0.3% on a dovish statement from BoJ Governor Kuroda, before ending the day flat. Oil was also flat on the day, 10-year yields were down 3bp in line with USD.

Wednesday February 20

Equities moved up today after the Fed minutes offered little in the way of surprises, given the various speeches since the last release. There was little other news to move markets. DXY fell slightly at the time of the release but ended the day flat. Currencies showed slight and indecisive moves, with GBP and JPY slightly up and CAD a little down. Oil rose sharply at the US Open to finish the day over 1% up (despite the one day late API report which missed). Yields were flat.

Thursday February 21 

The mood changed today as the Mar 1 tariff hike deadline approaches. After a rally in futures before the open, SPX fell fast, and ended the day 0.4% down. Other markets followed suit, with FTSE falling particularly hard, down 0.85%, following profit warnings from CNA.L and BA.L The German Manufacturing PMI miss (47.6 vs 49.7) had relatively little effect on DAX or EUR, in fact it was yet another flat day for DXY (up 0.10%) with EUR and GBP hardly moved, although JPY and Gold were up, and AUD and CAD were down in line with the risk-off mood, the former losing 1% after a dovish report from Westpac and news of Chinese restrictions on Australian coal. Oil gave up a little of yesterday’s gains. Yields were surprisingly up 4bp.

Friday February 22

Today President Trump said it was “more likely than not” that a China trade deal would happen, and this was enough to reverse Thursday’s decline. All equity markets were up, although non-US markets came off a little after their cash sessions closed. USD was down today, but again it was slight with DXY only down -0.13% due to another flat day on EURUSD. Other currencies, Gold, Oil and bond prices (inverse to yields) were up in line. 

WEEKLY PRICE MOVEMENT

NKY was the strongest index this week, adding 2.51%. In a reversal of last week where GBPNZD was the weakest pair, this week it was the strongest. It was a strong week for cryptos after months in the doldrums. Given the 0.50% gain in NDX, it was no surprised that FANGS were directionless.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on UUP. 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)

• Powell Humphrey-Hawkins Testimony
• Trade war deadline approaches
• Another key Brexit debate and vote
• Delayed US Q4 GDP released
• 
  

Monday February 25

As earnings season winds down, we have TCEHY (one of the Chinese ‘BAT’ tech stocks) and Dow component HD reporting before the bell. Fed Kaplan (dovish, 2020 voter) and Vice-Chair Clarida (centrist, 2019 and 2020 voter) are on a panel at 1500. There is little in the way of economic news, so as ever, macro focus will be on the China trade talks and Friday’s deadline.

21:45 NZD NZ Retail Sales (Sunday)

05:00 JPY Japan Leading Economic Index

13:30 USD Chicago Fed National Activity Index 

Tuesday February 26

After BoE Governor Carney testifies at the UK parliament inflation report hearings, and embattled UK PM May gives her latest speech on Brexit progress with the EU (not much, we expect), we have Fed Chair Powell giving his semi-annual Humphrey-Hawkins testimony to the House today.

07:00 EUR Germany Gfk Consumer Confidence Survey

10:00 GBP UK Inflation Report Hearings (time approx.)

12:30 GBP UK PM May speech (time approx.)

13:30 USD US Building Permits/Housing Starts

14:00 USD US S&P/Case-Shiller Home Price Indices

14:00 USD Fed Powell Humphrey-Hawkins Day 1 Testimony

15:00 USD US Consumer Confidence

21:30 WTI API Stock Report

21:45 NZD NZ Imports/Exports/TB

Wednesday February 27

Today President Trump starts a two-day meeting with DPRK leader Kim Jong-Un in Hanoi. The Senate have their turn with Jay Powell, with an unscripted Q&A. There will be yet another vote on Brexit, based on any changes reported by PM May the day before. The EIA stock report returns after several weeks.

10:40 EUR DE10Y Bond Auction

13:30 USD US Durable Goods

13:30 CAD Canada CPI

14:00 USD Fed Powell Humphrey-Hawkins Day 2 Testimony

15:00 USD US Pending Home Sales (MoM)

15:00 USD US Factory Orders (MoM)

15:30 WTI EIA Stock Report

18:00 GBP UK Parliamentary vote on Brexit

23:50 JPY Japan Industrial Production (YoY)

23:50 JPY Japan Retail Trade

Thursday February 28

The main release of the day, if not the week is the delayed preliminary 18Q4 US GDP report. Three Fed speakers today, Bostic (dovish, non-voter) at 1350, Harker (dove, 2020 voter) at 1715, and Kaplan again at 1800.

00:01 GBP UK Gfk Consumer Confidence

00:30 AUD Aus HIA New Home Sales (MoM)

01:00 CNY China NBS PMIs

13:00 EUR Germany CPI

13:30 CAD Canada Current Account

13:30 USD US Jobless Claims

13:30 USD US Preliminary GDP/PCE

14:45 USD Chicago PMI

21:30 AUD Aus AiG Performance of Mfg Index

21:45 NZD NZ Building Permits s.a. (MoM)

23:30 JPY Tokyo CPI/Unemployment Rate

Friday March 01

Today is the first day of the new month, and of course the end of the 90-day trade truce, and the date China tariffs are increased from 10% to 25% on $200 billion of goods. The shutdown-delayed December US PCE report (the Fed’s preferred inflation proxy) is released. Fed Bostic (dovish, non-voter) speaks at 1815. Italy presents its latest budget at 1000, which may result in a fresh row with Brussels. Markets in South Korea are closed.

01:45 CNY China Caixin Manufacturing PMI

08:30 GBP UK Markit Manufacturing PMI

08:30 EUR Germany Markit Manufacturing PMI

08:55 EUR Germany Unemployment Change/Rate s.a.

10:00 EUR Eurozone Unemployment Rate

10:00 EUR Eurozone CPI

13:30 USD US Core PCE Price Index/Personal Spending

13:30 CAD Canada GDP

14:45 USD US Markit Manufacturing PMI

15:00 USD Michigan Consumer Sentiment Index

15:00 USD US ISM Manufacturing PMI/Prices Paid

18:00 WTI Baker Hughes Rig Count

23:30 JPY Japan Jobs/applicants ratio

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