Sunday 19 May 2019

Week to May 17th

Tariff collapse and recovery, Best Michigan CS for 15 years, Crypto rally continues

Mon May 13
Friday’s imposition of China tariffs, no trade war resolution in sight, and China’s tit-for-tat tariffs on $60Bn of goods really hit home today, with SPX giving up 2.4%, and the risk sensitive NDX down 3.4%, the worst day since January 3rd. At 2811.9, the index closed at 4.8% below the new high made two weeks ago. Other indices followed the US, as they usually do. The flat (DXY +0.03%) dollar as usual reflected risk-off, with JPY (and Gold and Bonds) up, and other currencies down. Oil had rallied in Asia/Europe, but was sharply sold off in the US, in line with the mood.

Tuesday May 14
Some reassuring tweets from the President halted the slide and we had a Turnaround Tuesday in equities, Oil, JPY, Gold and bonds. Trump said the deal would “all happen, and much faster than people think!”. The recovery was weak, clawing back less than half the Monday slide. DXY was firmer today, adding 0.17% with all currencies except CAD sliding, the latter helped by Oil.

Wednesday May 15
Today’s Presidential tweet was confirming a delay in European auto tariffs. As you would expect DAX, which had been sliding, soared, as did US indices. Similar effects were seen in NKY and FTSE. SPX had fallen 0.7% following the Retail Sales miss at 1230, and rose 1.5% after the tweet. The dollar was quiet, with only a 0.04% rise in DXY it nevertheless gained against every currency and Gold. Nevertheless bond markets were not convinced and yields were down again.

Thursday May 16
Another up day for SPX to make a three days streak, recovering Monday’s losses and going green for the week, considerably so in the case of DAX. USD continued to advance, with DXY posting a fourth day up by 0.28%. All currencies, Gold, and bonds (inverse to yields) fell, and Oil advanced, in line with the risk-on mood.

Friday May 17
After recovering the Monday losses on Thursday, stocks turned done after negative reports on the China talks. TSLA fell 7.6% on another fatal autopilot crash. There was a spike up on the best Michigan Consumer Sentiment reading (102.4 vs 97.2 est) for 15 years at 1400, but this faded towards the close, although the correlating drop in Gold held. USD had a fifth green day, with DXY adding 0.19%, up across the board, except for CAD which shot up on reports that the US was considering lifting USMCA tariffs.

The FTSE was the top-performing index this week almost exactly matching the pullback in GBP (ie expressed in dollars, it hardly moved). With the dollar up everywhere, cable rather than GBPJPY took the top spot for movement. Shorting the pair would have gained you 2.14%. Cryptos had an even stronger week than last week, with ETH posting its best week on 2019. FANGs were fairly quiet, except for AAPL which fell sharply.

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)

  • FOMC Minutes and Powell speech
  • UK inflation
  • German Manufacturing PMI
  • Final DJIA component HD reports

Monday May 20
Another quiet Monday on data. At some point, probably this week, the US will release its currency manipulation report. There is a rate decision on ILS. Markets are closed in Canada, Malaysia, Singapore, Thailand, and Sri Lanka.

23:50 JPY Japan GDP (QoQ e0.0% p0.5%)(Sunday)
06:00 EUR Germany PPI
12:30 USD Chicago Fed National Activity Index 
16:30 GBP BoE Broadbent speech
17:05 USD Fed Clarida speech
23:00 USD Fed Chair Powell speech

Tuesday May 21
Most of the news is Antipodean today. DJIA component HD reports before the bell, which will keep the focus on retailers, who typically report later than other sectors. There is a rate decision on NGN. Markets are closed in Chile for Navy Day.

01:30 AUD RBA Meeting Minutes
02:15 AUD RBA Governor Lowe speech
14:00 USD US Existing Home Sales (MoM)
14:00 NZD GDT Milk Index
16:00 USD Fed Rosengren speech
21:30 WTI API Oil Stock
22:45 NZD NZ Retail Sales (QoQ e0.0% p1.7%) 
23:50 JPY Japan Imports/Exports/TB

Wednesday May 22
The main news day of the week, with the Fed April minutes. Traders will be again looking for signs of cuts, or some softening. There is a rate decision on ISK. Markets are closed again in Malaysia.

01:30 JPY BoJ Harada speech
05:00 USD Fed Bullard speech
08:30 GBP UK CPI (Core YoY e2.2% p1.9%)
12:30 CAD Canada Retail Sales (MoM Mar e0.4% p0.8%)
14:30 WTI EIA Oil Stock
18:00 USD FOMC Minutes

Thursday May 23
The most important news today is whether German Manufacturing has turned a corner, as per the estimate, or slid further. The European Parliamentary elections start today, until Sunday. There is a rate decision on ZAR (6.75% hold expected), and EGP. Markets are closed in Jamaica.

06:00 EUR Germany GDP
07:30 EUR Germany Markit PMIs (Manuf e45 p44.4)
08:00 EUR Germany IFO Sentiment Indicators
08:00 EUR Eurozone Markit PMIs (Composite e51.8 p51.5)
12:30 USD US Jobless Claims
13:45 USD US Markit PMIs
14:00 USD US New Home Sales (MoM)
22:45 NZD NZ Imports/Exports/TB
23:30 JPY Japan National CPI

Friday May 24
US Durable Goods/Capital Goods are the main print of the day. There are elections in Belgium and Spain this weekend, and we go into a long Memorial Day weekend. (The UK is also closed on Monday. Markets are closed today in Bulgaria and Bermuda (did you know they had an exchange?)

04:30 JPY Japan All Industry Activity Index (MoM)
08:30 GBP UK Retail Sales
12:30 USD Durable Goods/ND Capital Goods (NDCG Apr e0.1% p1.0%)

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