Credit Agricole Research рассматривает перспективы швейцарского франка и поддерживает свой медвежий настрой, выражая его через удерживание длинных позиций по парам EUR/CHF и GBP/CHF. "Мы ожидаем, что глобальный настроений в отношении риска будет оставаться основным драйвером для рынков. Аппетит инвесторов к рисковым активам падают в ответ на растущую политическую неопределенность, связанную с США. Тем не менее, в условиях, которые характеризуются хорошо поддержанными ожиданиями роста, мы видим, что низкие масштабы неприятия риска устойчиво растут. С этой точки зрения мы придерживаемся мнения о том, что низко доходные валюты , такие как франк, подвержены понижательному риску, как против евро, так и против фунта. Следует также отметить, что агрессивная политическая смесь ЦБ Швейцарии, состоящая из отрицательных ставок и валютных интервенций, если это необходимо, должна продолжать удерживать привлекательность "безопасного" франка на низком уровне", - утверждает CACIB. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Last week’s trading ended in the red for all but one of the major asset classes, based on a set of exchange-traded products. US inflation-linked Treasuries edged higher over the five trading days through Mar. 2 while losses weighed on everything else. The iShares TIPS Bond (TIP) ticked up 0.2% last week, an outlier gain […]
В конце февраля, скорее всего, будет наблюдаться широкая покупка доллара из-за финансовых потоков, связанных с балансировкой портфелей в конце месяца, заявляет стратег Credit Agricole Дженнифер Хау. Слабость американского рынка акций в феврале и восстановление доллара против большин читать далее…
After euphoric premarket spikes for two consecutive days in global stocks, this morning S&P futures point to a modestly lower open, while trading in Asia is mixed and Europe is down modestly. Following yesterday's closing burst in the S&P500, which was reminiscent of the late January meltup, and which resulted in the February correction, S&P futures were down 7 points, trading near sessions lows, if in a modest range after yesterday's 33 point move higher in the cash index. The dollar, like S&P futures, was stuck in narrow ranges as investors await Jerome Powell’s first public comments in the role of Federal Reserve chairman on Tuesday. The Bloomberg Dollar Spot Index recouped earlier losses, while the Treasury 10-year yield held steady at 2.86% after declining 9bps in the past three days. As previewed yesterday, Fed Chair Powell will appear before the House Financial Services Committee Tuesday at 1030am ET (testimony released at 830am ET) to discuss the Fed’s Semi-Annual Monetary Policy Report and the state of the economy. Investors will look for any clues on whether four 25bps rate hikes in 2018 are likely. Back in his testimony ahead of getting confirmed as Fed Chair, Powell said that risks to the economy appeared to be balanced The Fed Chairman should stick to the current forecast of three hikes this year as he will be cautious not to shake up expectations until the FOMC comes up with its updated projections in March, Credit Agricole strategists including David Forrester write in a note. “We don’t believe any ‘sell the fact’ attempt to sell the USD will prove lasting, especially if data continues to support higher yields." "Our sense is that he is unlikely to scare the horses,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “If so, the risk is that bond yields could track a bit lower and equities could remain supportive. Under such an environment, the dollar probably trades weaker." “The market is a little bit cautious ahead of this speech, but we think he (Powell) is likely to stress the continuity of monetary policy...because it wouldn’t be in his interest to have any major market reactions - that would make his job more difficult,” said Commerzbank currency strategist Anje Praefcke. “What he’s likely to state is what we’ve seen in the FOMC (Federal Open Markets Committee) minutes: that the outlook for the U.S. economy has improved considerably, short-term, and that both wages and consumer price inflation have recently surprised on the upside.” Meanwhile, stocks have already priced in a dovish (or at worst neutral) Fed, as the S&P is already back to the level where it was before the February selloff's worst day. Though the S&P down over 2% for February, it has recovered more than two thirds of the losses sustained in the wake of a drastic selloff early this month. Europe’s Stoxx 600 extended declines this morning to 0.3%, with 2 stocks down for every one that rises; most industry groups in the index declined, led by real estate and telecoms companies. All but two industry groups are in the red, with telecom and chemical shares leading losses. Offsetting the drop was the Stoxx 600 Media Index which jumped 1.6% as Sky surges after the Comcast overbid. Consumer discretionary is the notable outperformer, lifted by Sky (+21%) after Comcast made an offer of GBP 12.50/shr for the Co., subsequently posing a threat to FOX’s (FOXA) offer for the Co. Elsewhere, UK homebuilders are firmer this morning following the latest earnings update from Persimmon (+11%) which has lifted some of its competitors higher in sympathy; Berkeley Group (BKG LN) +2.3%, Barratt Developments (+2.1%) and Taylor Wimpey (+1.7%). Earlier, Asian equities edged modestly higher, with Japanese stocks climbing to the highest in more than three weeks. ASX 200 (+0.2%) and Nikkei 225 (+1.1%) were both higher with the top performers in Australia underpinned by earnings releases, while the Japanese benchmark led the region and briefly surmounted the 22500 level. Elsewhere, Chinese markets were mixed in which the Hang Seng (-0.7%) was choppy and Shanghai Comp. (-1.1%) was the laggard after the PBoC refrained from open market operations. Furthermore, press reports also noted that China is facing tight liquidity conditions in March and that the PBoC could raise rates on open market o perations next month following an anticipated Fed hike. Earlier in the session, the MSCI All-Country World Index, was up 0.1% and set for its third straight day of gains after hitting its highest level since Feb. 5, although if Europe continues to sink, and if futures fail to rebound, the streak will soon be broken. Elsewhere in currencies, G10 currencies traded in narrow ranges against the dollar ahead of Powell’s appearance, with 21-DMAs seen as next hurdles for several pairs. The Sweden’s krona slides to a fresh eight-year low of 10.0903 against the euro; Sweden earlier saw a weaker-than- forecast economic tendency survey, followed by comments by Riksbank First Deputy Governor af Jochnick who expressed worry over the weak underlying inflation pressures. The USD/JPY traded in narrow 31-pip range as it continues to consolidate under 108 handle. The NZD/USD sold on disappointing trade data; nearing test of initial support at 0.7271, last week’s low. The euro traded at $1.2334, up 0.1 percent, but off its three-year high of $1.2556 hit earlier this month. Fed funds rate futures were almost fully pricing in a rate hike at the Fed’s next policy meeting on March 20-21. “Expectations that Powell will be sensitive to financial markets appear to be running high. But he hasn’t said he will sacrifice policy normalization for the sake of financial markets. I feel there is room for disappointment in markets,” said Hiroko Iwaki, senior bond strategist at Mizuho Securities. The 10-year Treasury yield edged higher after falling to a two-week low, rising to 2.870% if well below the recent four-year peak of 2.957% touched on Feb. 21, driven by month-end buying as well as position adjustments ahead of Powell’s testimony; German bunds and U.K. gilts led a retreat in European bonds. In other overnight news, Treasury Secretary Mnuchin said US does not set policy to impact the USD, reiterates strong USD good for the economy. ECB's Weidmann said if economic upswing continues and prices rise there should be no reason not to end QE this year. Evidence that movements in FX are having a smaller impact on inflation than previously. Bigger QE reduction and clear end date to the bond buying programme would have been justifiable. In the latest Brexit news, UK Foreign Secretary Boris Johnson stated that UK will not remain subject to ECJ rulings.Reports stated the EU will threaten UK PM May's Brexit plan by rejecting British compromises and will warn that Northern Ireland must sign up to Brussels regulations; draft Brexit treaty is to be published on Wednesday. In related news, Brussels is expected to demand the UK remain under European Court of Justice oversight indefinitely post-Brexit under divorce agreement. French President Macron says a customs union agreement with the UK after Brexit is possible, however would not give full access to single market. Oil prices erased earlier gains as investor concerns about rising U.S. oil output offset signs of stronger demand and faith in the ability of OPEC production curbs to curtail supply. U.S. West Texas Intermediate futures fetched $63.68, down 0.3 percent, after hitting a three-week high of $64.24 the previous day. In addition to Powell's market-moving testimony, the market is set to receive a number of macro data, including the house price index. Marriott and Live Nation are among the more than a hundred companies that will report quarterly numbers Market Snapshot S&P 500 futures down 0.2% to 2,778 STOXX Europe 600 down 0.2% to 382.36 MSCI Asia Pacific up 0.2% to 179.65 MSCI Asia Pacific ex Japan down 0.2% to 586.04 Nikkei up 1.1% to 22,389.86 Topix up 0.9% to 1,790.34 Hang Seng Index down 0.7% to 31,268.66 Shanghai Composite down 1.1% to 3,292.07 Sensex down 0.2% to 34,390.05 Australia S&P/ASX 200 up 0.2% to 6,056.86 Kospi down 0.06% to 2,456.14 German 10Y yield rose 1.9 bps to 0.671% Euro up 0.1% to $1.2333 Brent Futures down 0.2% to $67.38/bbl Italian 10Y yield fell 4.9 bps to 1.748% Spanish 10Y yield rose 0.6 bps to 1.562% Bulletin Headline Summary from RanSquawk European bourses trade with little in the way of firm direction as markets await Fed Chair Powell’s testimony Above average Dollar demand for end of February FX portfolios seems to be keeping the broader Usd afloat as the DXY meanders around the mid-point of a tight 89.690-830 range Looking ahead, highlights nation German CPI, US durables, APIs and a slew of speakers Top overnight news from BBG EU Said to Stoke Brexit Tensions With 100-Page Draft Exit Deal Comcast Offers to Buy Sky in $30 Billion Challenge to Fox Traders Unfazed by Italy Election, But Some Warn of Complacency Federal Reserve Chairman Jerome Powell’s embrace of his predecessor’s gradual approach to tightening monetary policy is about to be tested as he delivers his first congressional testimony on Tuesday. The European Union will challenge Theresa May on Wednesday when it publishes a draft Brexit treaty that ignores some of the U.K. prime minister’s most important demands. Mario Draghi largely skirted the Latvia crisis affecting the European Central Bank and stuck to his plans to keep adding stimulus as he addressed European Parliament lawmakers on Monday. Xi Jinping’s decision to cast aside China’s presidential term limits is stoking concern he also intends to shun international rules on trade and finance, even as he champions them on the world stage. It doesn’t make sense for the U.S. to impose steel and aluminum tariffs on other NATO members in the name of national security, according to a senior European Union official. China plans to reduce its annual budget-deficit target to just under 3 percent of total economic output, people familiar with the matter said Asian equity markets traded mixed following yesterday’s US gains where declining yields eased some concerns of steep rate increases and the majors rallied to their best levels in over 3 weeks. ASX 200 (+0.2%) and Nikkei 225 (+1.1%) were both higher with the top performers in Australia underpinned by earnings releases, while the Japanese benchmark led the region and briefly surmounted the 22500 level. Elsewhere, Chinese markets were mixed in which the Hang Seng (-0.7%) was choppy and Shanghai Comp. (-1.1%) was the laggard after the PBoC refrained from open market operations. Furthermore, press reports also noted that China is facing tight liquidity conditions in March and that the PBoC could raise rates on open market operations next month following an anticipated Fed hike. Finally, 10yr JGBs were relatively flat despite the upside in riskier assets, with prices contained at the 151.00 level while today’s 2yr auction results were also encouraging with b/c and accepted prices higher than previous. PBoC skipped open market operations and cited relatively high liquidity in the banking system. PBoC set CNY mid-point at 6.3146 (Prev. 6.3378). PBoC may increase Open Market Operation rates in March after an expected Fed rate hike with the increases in repo rates will likely be around 5bps, while reports added that China is to face a tight balance in liquidity during next month. Top Asian News China Is Said to Plan First Budget Deficit Target Cut Since 2012 Alibaba Said to Buy Out Baidu in China’s Top Takeout App Bank Fraud Fallout in India Spreads to Market for Trade Finance Guinigundo Doesn’t See Need to Raise Policy Rate ‘At this Point’ Chinese Investors Yank Record Funds From Hong Kong Stocks More European stocks fall, trading near session lows, (Stoxx 600 down -0.3%), after the Sky overbid and post-Asia-Pac opening gains were trimmed. Taking a look at the sectors, consumer discretionary is the notable outperformer, lifted by Sky (+21%) after Comcast made an offer of GBP 12.50/shr for the Co., subsequently posing a threat to FOX’s (FOXA) offer for the Co. Elsewhere, UK homebuilders are firmer this morning following the latest earnings update from Persimmon (+11%) which has lifted some of its competitors higher in sympathy; Berkeley Group (BKG LN) +2.3%, Barratt Developments (+2.1%) and Taylor Wimpey (+1.7%). Finally, Provident Financial (+74%) tops the Stoxx 600 after announcing its rights issue and settlement with the FCA. Top European News EU Said to Stoke Brexit Tensions With 100-Page Draft Exit Deal World’s Biggest Wealth Fund Returned $131 Billion in 2017 Business Gauge Picks up in Italy Shortly Before Election Provident Surges on Better-Than-Feared FCA Pact, Dividend Plan In currencies, above average Dollar demand for end of February FX portfolios seems to be keeping the broader Usd afloat as the DXY meanders around the mid-point of a tight 89.690-830 range. Currency markets also erring on the side of caution ahead of Fed chair Powell’s House testimony and (potentially) any further clues about risks around the FOMC consensus for 3 hikes in 2018. Indeed, individual G10 pairs are equally restrained within narrow bands, with Eur/Usd holding between 1.2300-50 amidst mixed EZ inflation data (German states soft, so far vs firmer Spanish headline and harmonised prints) and Cable not deviating outside 1.3950-1.4000 despite some Gbp negative Brexit reports. Perhaps Sterling deriving some support from latest M&A developments and Comcast’s mega Gbp22 bn bid for Sky. Usd/Jpy looks even more tethered to the 107.00 level, with export supply capping the upside and buying interest supporting ahead of 106.50. Elsewhere, some further movement in Eur/Sek after Swedish trade data and more dovish-sounding Riksbank rhetoric with the cross inching above the circa 10.0800 high from 2016 to 10.0900. In the commodities complex, both WTI and Brent crude futures have continued to pull back from recent highs despite the softer USD as concerns over mounting US production remains a key theme with IEA Chief Birol stating that the US is to be largest oil producer by next year and sees US output exceeding 11mln bpd by late this year. In metals markets, spot gold is relatively steady at this stage of the session with markets awaiting Fed Powell’s testimony later today. Elsewhere, Chinese steel futures saw another session of gains overnight amid speculation over further extensions to output curbs. Iraqi oil production is around 4.35mln bpd, according to Iraq oil ministry official. US Event Calendar 8:30am: Advance Goods Trade Balance, est. $72.3b deficit, prior $71.6b deficit, revised $72.3b deficit 8:30am: Wholesale Inventories MoM, est. 0.4%, prior 0.4%; Retail Inventories MoM, prior 0.2%, revised 0.2% 8:30am: Durable Goods Orders, est. -2.0%, prior 2.8%; Durables Ex Transportation, est. 0.4%, prior 0.7% 8:30am: Cap Goods Orders Nondef Ex Air, est. 0.5%, prior -0.6%; Cap Goods Ship Nondef Ex Air, est. 0.3%, prior 0.4% 9am: House Price Purchase Index QoQ, prior 1.4%; FHFA House Price Index MoM, est. 0.4%, prior 0.4% 9am: S&P CoreLogic CS 20-City NSA Index, prior 204.2; CS 20-City MoM SA, est. 0.6%, prior 0.75% 10am: Richmond Fed Manufact. Index, est. 15, prior 14 10am: Conf. Board Consumer Confidence, est. 126.5, prior 125.4; Present Situation, prior 155.3; Expectations, prior 105.5 Central Banks 8:30am: Fed Powell’s Congressional Testimony is Released 10am: Fed’s Powell Testifies to House Financial Services Committee DB's Jim Reid concludes the overnight wrap The highlight today will be German inflation (1.3% yoy expected) and new Fed Chair Powell’s testimony at 3pm GMT. Mr Powell will be speaking on behalf of the FOMC, and our economists fully expect him to reiterate that a “gradual” path of policy normalization remains the order of the day. However, he will also likely discuss emerging upside risks to the growth outlook in the wake of recent fiscal policy changes. In this respect, the minutes of the January 31 FOMC meeting provide a good template for Powell’s prepared remarks. Recall that last week’s minutes indicated that “Most members noted that recent information on inflation along with prospects for a continued solid pace of economic activity provided support for the view that inflation on a 12-month basis would likely move up in 2018 and stabilize around the Committee’s 2% objective in the medium term.” In short, Powell will likely convey the message that with an improving growth and labor market outlook, the Fed continues to gain confidence that the inflation side of its dual mandate will soon be met. Outside of this the market will be fascinating to see how he handles his first big public appearance in the new role. Staying in the US, Mr Quarles who became a Fed Governor last October seemed reasonably upbeat last night. He noted “it has been quite some time since the (US) economic environment looked as favourable as it does now” and that “some of the factors that have been holding back growth…could shift, moving the economy onto a higher growth trajectory”. On rates, he reiterated the Fed’s view of “further gradual increases in rates will be appropriate…”, while noting the Fed will be “looking at Volcker rule recalibrations over the next few months”. Elsewhere, the Fed’s Bullard reiterated his dovish views that the Fed should avoid an aggressive pace of rate hikes unless incoming macro data surprise to the upside. He added “these are good times for the US economy, but not as good as they’ve been at other junctures”. This morning in Asia, markets have broadly followed the positive US lead last night with the Nikkei (+0.95%) and Kospi (+0.21%) both up, while the Hang Seng is marginally down (-0.15%) and China’s CSI 300 -1.35% lower as we type. Earlier the S&P was up for the third consecutive day (+1.18%) and now +7.7% above its recent lows while only -3.2% below its all-time high. Within the S&P, all sectors but utilities were up with gains led by the telco, tech and financial stocks. In tech, an equally weighted market cap index on the FANG stocks is now back at its record highs and 12.1% higher than its recent lows. The Dow (+1.58%) and Nasdaq (+1.15%) also rallied yesterday. Back in Europe, all markets were higher, with the Stoxx 600 (+0.50%), DAX (+0.35%) and FTSE (+0.62%) modestly up. The VIX fell for the fourth straight day to 15.80 (-4.2%). In government bonds, core 10y bond yields were little changed (UST 10y -0.5bp; Gilts -1.2bp; Bunds flat) while peripherals outperformed with yields down 4-5bp. Gains were led by Italy, in part as the governing Democratic Party leader Renzi noted “we’ll never form any government with extremists” as per the La Stempa newspaper. Turning to currencies, the US dollar index and Sterling both dipped marginally, while the Euro rose 0.18%. In commodities, WTI oil was up for the third straight day (+0.57%). Elsewhere, precious metals gained c0.5% (Gold +0.37%; Silver +0.77%) and other base metals were mixed but little changed (Copper -0.21%; Aluminium -0.70%; Zinc +0.51%). Away from markets and onto Mr Draghi’s Parliamentary address where he seemed slightly dovish and broadly stuck to prior commentaries. On QE, he noted “the possible extension of QE has not been discussed by the Governing Council”. On inflation, he said “we’re generally more confident that it is proceeding towards our target”, but we also “have to be persistent and patient because the underlying inflation has yet to show more convincing signs of a sustained upward adjustment”. Further, “the evolution of inflation remains crucially conditional on an ample degree of monetary stimulus provided by the full set of our monetary policy measures….” On the outlook, he noted that the “…economic situation is improving constantly”, but “uncertainties continues to prevail”, so “we need the right blend” of measures. Finally on FX, he reiterated that the recent volatility in the Euro deserves close monitoring. Tuning to Brexit headlines. The UK opposition leader Corbyn has confirmed what had been well flagged namely that the Labour party’s supports staying in a customs union with the EU post Brexit and is calling for cross party support. This is contrary to the government’s position, which issued a statement later to indicate “the government will not be joining a customs union…we want to have the freedom to sign our trade deals”. Elsewhere, Mr Corbyn reiterated there was no need for a second referendum on Brexit but does want a meaningful vote in Parliament at the end of the Brexit negotiations. Looking ahead, the EU is expected to publish a draft Brexit treaty on Wednesday and PM May will outline her vision of Brexit this Friday. Staying in Europe and delving into Italian credits a bit more, Michal Jezek in my team published a report "IG Strategy: Credit Pricing Ahead of the Italian Elections". He notes that sovereign credit has outperformed corporates YTD and hedging flows have turned CDS indices into major underperformers, pushing the CDS-bond basis to the extreme. The report also analyses the relative performance of Italian corporate credit. It concludes that iTraxx Europe indices now trade too cheap to be efficient hedges around the event and given the strong hedging flows, it suggests that current levels offer an attractive entry point for the strategic CDSbond basis compression trade recommended earlier. Refer to the full report here. Finally, our US economists have built on their recent work on procyclical and acyclical inflation. Their new estimates of r-star (neutral funds rates) derived from procyclical inflation are about 20bps higher than estimates derived from core inflation, as is standard with r-star estimates. This implies that the Fed has even further to hike before getting to neutral than commonly assumed. That said, they view their analysis as evidence which makes them more confident in their current outlook for four rate hikes in 2018 and a terminal rate above 3%. Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the February Dallas Fed manufacturing index was above market at 37.2 (vs. 30 expected) and the highest since December 2005. The January Chicago Fed National activity index was below expectations but still above 0 at 0.12 (vs. 0.25 expected). Elsewhere, the January new home sales fell 7.8% mom to the lowest since August (593k vs. 647k expected). In the UK, the January Finance loans for housing was 40.1k (vs. 37k expected). Looking at the day ahead, Germany’s flash February CPI and the Euro area’s January money supply prints are due. Then a range of February confidence indicators are due for the Euro area, France and Italy. In the US, the February Richmond Fed and CB consumer confidence index will be out. Further, a deluge of data including: January advanced goods trade balance, wholesale and retail inventories, durable and capital goods orders along with the December FHFA and S&P corelogic house price index are also due. Onto other events, the Fed’s Powell testifies in front of the House Financial services committee. Elsewhere, the ECB’s Weidmann and Mersch as well as BOE’s Sam Woods will speak. The Brookings Institution will host a conversation with the former Fed Governor Yellen and Bernanke. Finally, the EU negotiator Barnier will brief European affairs ministers.
As we previewed earlier this week, only one number matters for the markets - both stocks and bonds - this week, and it will be released at 8:30am this morning, when the BLS unveils the January CPI print, dubbed by various trading desks as "the most important CPI print ever", with every trader, both carbon and semiconductor based, focusing only on whether core CPI comes at 0.2% as expected, or higher. If it's the latter, TSY yields will spike - conventional wisdom goes - while the second leg of the equity rout could be unleashed. Inversely, if the core CPI disappoints, we may see a sharp move lower in 10Y yields and the dollar, while stocks prepare to retest all time highs. “Since the last payrolls about two weeks ago, inflation is the obsession of traders,” Pierre Martin, a trader at Saxo Bank in Zurich, told Bloomberg. “Given the selloff in stocks and with a lot of brokers pushing clients to buy the dip, people are trying to position themselves ahead of the CPI figures today. The sentiment is that a lot has been priced in already, but I’m a bit more cautious and wouldn’t be surprised to see volatility aftershocks in the coming days,” Martin said. There have been no volatility shocks for now, however, as one look at the futures and global stocks ahead of today's CPI shows not only the inverse of yesterday's early sea of red (which quickly turned green) but broad consensus - for now at least - that either the CPI number will disappoint or the market will promptly decide it does not matter if it indicates the economy is overheating. Following another day of strong gains around the globe, S&P index futures extended gains, hitting a session high as European opened when the E-mini ran upside stops through Monday highs, although gains have since been somewhat pared back. March contracts on the S&P 500 rose 0.4 percent just after 6am ET, fluctuating during Asian trading hours. Futures on the Dow Jones Industrial Average added 0.6 percent, while the Nasdaq 100 Index was up 0.6 percent. Also keep in mind that even if the CPI proves to be a dud, today is the monthly VIX options expiration. Counting puts and calls, there are 15.4 million VIX options outstanding, and 40% of them mature today. The move has the potential to spark substantial market volatility. Ahead of the CPI, traders were again keenly focused on the second day of drama in the USDJPY which as noted overnight, took out a huge barrier as the Japanese currency hit a fresh 15-month high only to see dollar buyers emerge on break below 107.00 amid concerns faster U.S. inflation will drive down stocks. Both the Nikkei (-0.4%) and Topix (-0.8%) closed red as a result. However, after the European open, the Yen lost some ground as the dollar rebounded after its 4th consecutive day of losses, and at last check the USDJPY was trading around 107.40. As Bloomberg notes, USD/JPY recovered back to 107.50 after breaking below 107.00 in Asian session, leading to broader recovery for USD across G-10, DXY comes back to flat. In other currencies, the ZAR rallied after ANC confirmed a no-confidence vote in Zuma for tomorrow, while the SEK eventually weakened as Riksbank stresses lack of confidence in inflation levels. Equity trading during the Asian session was mixed as the region failed to sustain upward US. Australia's ASX 200 (-0.3%) was subdued amid underperformance in its largest weighted financial sector as banks mulled over the Australian Prudential Regulatory Authority’s discussion paper on the application of a future leverage ratio, while Nikkei 225 (-0.4%) underperformed after disappointing Q4 GDP data and as exporters suffered the ill-effects of the soaring Yen. Elsewhere, Shanghai Comp. (+0.5%) and Hang Seng (+2.3%) were resilient with Hong Kong propped up by strength among financials. Hong Kong’s Hang Seng Index rose 2.6% - it biggest daily gain since May 2016 - and the Hang Seng China Enterprises Index climbed 2.8%, with banks leading the gains as U.S. futures jumped. Hang Seng Bank was the best performer on Hang Seng, rising 7.3% and heading for biggest daily gain since May 2009; co.’s rating and price target raised at Goldman. The mainland Shanghai Composite and CSI 300 indexes were cautiously higher as Chinese markets wind down for lunar new year break. European stocks also advanced as investors assess earnings figures from companies including Natixis and Credit Suisse. The Stoxx Europe 600 Index rosw 0.6% in a broad rally. Banks were the best-performing industry group as Natixis and Credit Suisse lead gains. Sky climbed 3.2%, among the best gainers on the Stoxx 600, after the company secured its position as leading broadcaster of Premier League soccer for the next three-year cycle, reducing the cost per match by 16%. Meanwhile, after 10Y yields sunk to session lows around midnight, just above 2.80%, treasuries rebounded with futures and the dollar, rising to 2.84%; there was bull-flattening observed in both JGB and Aussie curves amid wider risk-off. Once again, if the CPI surprises to the upside, watch as the 10Y yield jumps above 2.90% on its way to 3.00% and beyond. Elsewhere, WTI and Brent crude futures traded lower in the wake of yesterday’s build in API inventories ahead of today’s DoE release with focus on US production figures which climbed above the 10mln bpd level last week and surpassed that of Saudi Arabia. In terms of recent energy commentary, the Saudi Oil Minister Al Falih says Saudi Arabia will invest for maximum oil output capacity and thus shows no signing of caving to the ongoing surge in US production. In metals markets, spot gold is modestly firmer, tracking fluctuations in the USD, while Copper saw its largest jump since October during Asia-Pac trade as shorts were covered ahead of the Lunar New Year and Dalian Iron Ore printed 3-week highs. In other news, the South African police have raided Gupta family's home. Ajay, Atul and Tony Gupta are accused of using their friendship with Mr Zuma to control state appointments and contracts, claims they and the president have denied, the FT reported. . There were also reports that Zuma was arrested but this was dismissed as fake news by the South African police minister Mbalula. Later it was reported that South African ANC have pushed for a motion of no confidence against Zuma for tomorrow. Figures on inflation and retail sales are set to face closer scrutiny than usual after the recent market plunge. Scheduled earnings include Cisco Systems, Applied Materials and Marriott. Market Snapshot S&P 500 futures up 0.4% to 2,673.00 STOXX Europe 600 up 0.8% to 373.40 MSCI Asia Pacific up 0.3% to 172.95 MSCI Asia Pacific ex Japan up 1% to 569.23 Nikkei down 0.4% to 21,154.17 Topix down 0.8% to 1,702.72 Hang Seng Index up 2.3% to 30,515.60 Shanghai Composite up 0.5% to 3,199.16 Sensex down 0.05% to 34,281.61 Australia S&P/ASX 200 down 0.3% to 5,841.24 Kospi up 1.1% to 2,421.83 German 10Y yield fell 1.4 bps to 0.736% Euro up 0.06% to $1.2360 Brent Futures down 0.7% to $62.30/bbl Italian 10Y yield rose 4.8 bps to 1.815% Spanish 10Y yield fell 2.6 bps to 1.498% Brent Futures down 0.7% to $62.30/bbl Gold spot up 0.08% to $1,330.59 U.S. Dollar Index down 0.06% to 89.65 Top Overnight News Federal Reserve Chairman Jerome Powell suggested that the U.S. central bank would push ahead with gradual interest-rate increases even as it remains on the lookout for threats to the financial system in the wake of the recent stock market rout. China tightened restrictions on equity-linked options trading, people familiar with the matter said, the latest sign that authorities are acting to contain market turbulence after the biggest stock slump in two years The euro-area economy expanded 0.6% q/q in the fourth quarter, in line with estimates, while industrial output expanded 0.4% m/m in December, versus +0.1% estimate Portugal, Malta, Slovakia and Latvia already have said they intend to support Spanish Economy Minister Luis de Guindos over Irish central bank governor Philip Lane to be the next vice president of the ECB. Officials from Austria, Cyprus and Finland told Bloomberg they are leaning toward supporting Guindos Japan’s economy expanded for an eighth quarter, but the pace of growth fell sharply and missed expectations Michael D. Cohen, President Trump’s longtime personal lawyer, said on Tuesday that he paid $130,000 out of his own pocket to a pornographic-film actress who had once claimed to have had an affair with Mr. Trump Economists who were slow to predict the first Bank of England interest-rate hike in a decade last year now expect the next one to come in May, but the decision is seen as being on a knife-edge Dutch Foreign Minister Halbe Zijlstra quit his post after admitting he lied about attending a 2006 meeting with Russian President Vladimir Putin, stepping down the same day he had been scheduled to travel to Moscow to meet his Russian counterpart U.S. forces killed scores of Russian mercenaries in Syria last week in what may be the deadliest clash between citizens of the former foes since the Cold War, according to one U.S. official and three Russians familiar with the matter. Asian sentiment was mixed as region failed to sustain the momentum from US, where stocks continued their rebound and posted a 3rd consecutive gain. ASX 200 (-0.3%) was subdued amid underperformance in its largest weighted financial sector as banks mulled over the Australian Prudential Regulatory Authority’s discussion paper on the application of a future leverage ratio, while Nikkei 225 (-0.4%) underperformed after disappointing Q4 GDP data and as exporters suffered the ill-effects of a firmer currency. Elsewhere, Shanghai Comp. (+0.5%) and Hang Seng (+2.3%) were resilient with Hong Kong propped up by strength amongst financials. Finally, 10yr JGBs were marginally higher amid a risk-averse tone in Japan and alongside overnight gains in USTs, while the 5yr JGB auction results were somewhat inconclusive and failed to impact prices. PBoC skipped open market operations. Top Asian News Japan’s Slower Growth, Surging Yen Tie the BOJ to Stimulus Singapore Economy Grows at Slower Pace Than Previously Estimated Hong Kong Stocks Set for Boost After Double Whammy Bruising Late Rally Spurs Hong Kong Shares to Biggest Gain Since May 2016 Malaysia Set for Solid, But Moderating Growth in 2018 European equities (Eurostoxx 50 +0.7%) trade higher across the board as sentiment remains supported in the wake of a firmer Wall St. close and mixed Asia-Pac session with macro newsflow otherwise relatively light for the region. In terms of sector specifics, financials have been in focus following earnings from Credit Suisse (+3.2%) who sit at the top of the SMI with gains for the sector mildly offset by Credit Agricole (-2.1%) who failed to appease investors with their latest statement. Elsewhere, energy names lag their peers alongside price action for WTI and Brent in the wake of yesterday’s API build. Top European News Euro-Area Economy Keeps Cruising Speed as 2018 Outlook Improves H&M Forecasts Physical Stores to Return to Growth Next Year Melrose Say Would Keep GKN’s Powder Metallurgy Unit German Economy Zips Along as Trade and Spending Drive Growth Five Star’s Pay Pledge Backfires: Italy Campaign Trail In currencies, the early focus on the Swedish Krona and a knee-jerk reaction to Riksbank Ohlsson’s objection against holding the repo rate steady at -0.5%. Eur/Sek briefly dropped below 9.8750 as the hawkish Board member dissented in favour of a 25 basis point hike before rebounding towards pre-policy verdict session highs (around 9.9200) on the unchanged guidance for tightening in H2 this year, slightly softer inflation outlook and caveat that more easing remains an option if favourable economic conditions change. Thereafter, SEK was placed under pressure during Jansson’s presser after stating that the Bank discussed whether to delat the first rate hike path.Meanwhile, the Jpy continued its sharp appreciation vs the Dollar and other major currency counterparts overnight, with Usd/Jpy taking out the 2017 low circa 107.30, and reported big barriers at 107.00 to record a fresh multi-year base around 106.85. However, spec short covering has subsequently pushed the pair back up over the 107.00 level to test offers around 107.50, and this has helped the DXY recover 89.500+ status. Eur/Usd looks flanked by bids and offers at 1.2350 and 1.2400 respectively, with hefty option expiries in the vicinity of those range extremes also likely to provide support and resistance (2.6 bn between 1.2335-50 and 2 bn from 1.2400-05). Other Usd/G10s are also relatively rangebound, but the Kiwi is outperforming after a rise in NZ inflation expectations, with Nzd/Usd back above 0.7300. In the EM region, Usd/Zar remains in the spotlight and back near recent lows around 11.8500 awaiting a response from President Zuma to the latest ANC party ‘requests’ to stand down, while raids on Gupta family residences have resulted in several arrests. In commodities, WTI and Brent crude futures trade lower in the wake of yesterday’s build in API inventories ahead of today’s DoE release with focus on US production figures which climbed above the 10mln bpd level last week and surpassed that of Saudi Arabia. In terms of recent energy commentary, the Saudi Oil Minister Al Falih says Saudi Arabia will invest for maximum oil output capacity and thus shows no signing of caving to the ongoing surge in US production. In metals markets, spot gold is modestly firmer, tracking fluctuations in the USD, while Copper saw its largest jump since October during Asia-Pac trade as shorts were covered ahead of the Lunar New Year and Dalian Iron Ore printed 3-week highs. US API Weekly Crude Stocks (Feb 9) 3.947M vs. Exp. 2.800M (Prev. -1.05M). CME raised crude oil future margins to USD 2100 from 1950 per contract for next month. Saudi Oil Minister Al Falih stated that Saudi Arabia will invest for maximum oil output capacity. (Newswires) As a guide, maximum sustainable oil capacity is 12.5mln bpd. Saudi Oil exports will be kept below 7mln bpd in March despite maintenance shutdown of Samref Refinery, while Aramco oil production will be 100K bpd below February levels; according to Saudi Oil Minister Looking at the day ahead, the key focus is clearly the January CPI report in the US, while January retail sales will also be released alongside it. December business inventories is the other data release due in the US while in Europe we’ll get Q4 GDP in Germany (second estimate) and the final January CPI revisions, along with Q4 GDP for the Euro area (second estimate). Away from data the Bundesbank’s Weidmann is due to speak in the morning, followed by the ECB’s Mersch. German Chancellor Merkel is also due to speak at a CDU event. CISCO, and Credit Agricole will report earnings US Event Calendar 7am: MBA Mortgage Applications, prior 0.7% 8:30am: US CPI MoM, est. 0.3%, prior 0.1%; Ex Food and Energy MoM, est. 0.2%, prior 0.3% US CPI YoY, est. 1.9%, prior 2.1%; Ex Food and Energy YoY, est. 1.7%, prior 1.8% 8:30am: Retail Sales Advance MoM, est. 0.2%, prior 0.4%; Ex Auto MoM, est. 0.5%, prior 0.4% Retail Sales Ex Auto and Gas, est. 0.3%, prior 0.4%; Retail Sales Control Group, est. 0.4%, prior 0.3% 8:30am: Real Avg Weekly Earnings YoY, prior 0.67%; Real Avg Hourly Earning YoY, prior 0.4% 10am: Business Inventories, est. 0.3%, prior 0.4% * * * DB's Jim Reid concludes the overnight wrap Will today provide a Valentine’s Day heartbreak for markets or will we feel the warm fuzzy embrace of a soft US CPI print that reminds people of the halcyon days of 2017? This really is going to be the main focal point every month this year we think. We are torn here at DB as 2018 has long been targeted by us as the year of the inflation comeback, however there are reasons why today’s number may not see this materialise yet. If it doesn’t we’d still be confident that the year will be marked by higher inflation than expected though. The official house forecast is for a slightly softer core inflation print for January (0.16% m/m), which would lower the year-over-year rate by one-tenth to 1.7%, due to the negative base effect from a strong print in January 2017. Nevertheless the 6-month annualised growth rate for core CPI would rise further to 2.2% under DB’s forecast. What adds to the uncertainty about today’s print is that the BLS have just updated their seasonal adjustments which may iron out what has been a consistent beat in recent years for January’s print. The new seasonal factors imply that January CPI will be 4 bps lower than it would have been under the previous seasonal assumptions and could easily be the difference between it rounding up or down a tenth. Our economists note that this risk may not be fully reflected in consensus expectations, which may have been submitted prior to the release of these factors. Staying with CPI, Craig and I put a short "Macro Bites" out this morning which follows on from our economists' work comparing the 1960s to the current decade. Their work looks at factors leading to a sudden breakout in inflation in the former period and how there are similarities to today. We show how various asset prices behaved pre and post the inflation surge in 1966 and compare it to today. As England football fans let’s hope the economic similarities aren't the only ones in 2018. Markets are again quiet leading into today's number. It's almost as if last week didn't happen. However the fact that the VIX and VStoxx remain at 24.97 (-2.5%) and 25.95 (-7.9%) respectively reminds us of the shock. In equities, European markets were broadly lower, partly reversing Monday’s gains with the Stoxx (-0.63%), DAX (-0.70%) and FTSE (-0.13%) all down modestly. The S&P initially traded c0.7% lower, but recovered throughout the day to be +0.26% higher with modest gains from the real estate, financials and discretionary consumer sectors. The Dow (+0.16%) and Nasdaq (+0.45%) also advanced modestly. Staying in the US, in the prepared remarks at his ceremonial swearing in, the new Fed Chair Powell reiterated that “we are in the process of gradually normalising both interest rate policy and our balance sheet with a view to extending the recovery…” Elsewhere, he noted that “we will remain alert to any developing risks to financial stability”, which to us sounds all very comforting, but imagine the potential carnage had he suggested that the Fed ‘won't’ be paying any attention to risks to financial stability. Finally, he indicated the “financial system is incomparably stronger and safer, with much higher capital and liquidity” and that “we will also preserve the essential gains in financial regulation while seeking to ensure that our policies are as efficient as possible”. Following on, the WSJ noted unnamed sources suggesting the Fed’s Mester impressed the selection team and that the White House is considering her for the Vice Fed Chair role, although also conceded there was currently no front runner for the job. Earlier on, Ms Mester reiterated her views that tax cuts could add 0.25%-0.5% of extra economic growth over this year and next, but given what she has seen so far, there could be “salient upside risks to the forecasts”. On rates, she reiterated that “if economic conditions evolve as expected, we’ll need to make some further increases in rates this year and next, at a pace similar to last year” when the Fed raised rates three times. This morning in Asia, markets are mixed. The Hang Seng (+1.25%), Kopsi (+0.93%) and China’s CSI 300 (+0.51%) are all up while Nikkei (-0.46%) is down modestly as we type. The latter partly impacted by the stronger YEN as it’s up c0.8% this morning back to mid-November 16 levels. Datawise, Japan’s 4Q GDP was below market and the lowest in two years at 0.5% annualised (vs 1% expected), with both private consumption and business spending lower than forecasts. Now recapping other markets performance from yesterday. In government bonds, slight risk aversion seemed to help core bonds with 10yr UST and Bunds yields down 2.9bp and 0.7bp respectively while Gilts rose 1.7bp following theb eat on CPI. Elsewhere, peripherals yields rose 4-6bp with losses led by Portugal. Turning to currencies, the US dollar index retreated for the second straight day (-0.56%), while the Euro and Sterling gained 0.49% and 0.40% respectively. In commodities, WTI oil dipped 0.17% while precious metals strengthened c0.4% (Gold +0.52%; Silver +0.21%). Other base metals broadly rebounded as the dollar weakened (Copper 1.37%; Zinc +1.96%; Aluminium -0.2%). In Germany, the potential for a new grand coalition government seems to have increased. Overnight, the SPD has elected a new party leader Andrea Nahles. She noted “I’ll lobby in favour of entering into a grand coalition” with Ms Mekel’s bloc and that “….I’m going to put everything I have into getting a successful outcome”. Looking ahead, the earlier agreement between Ms Merkel and the SPD needs to be approved by the c460,000 SPD members, which is expected to wrap up in early March. Elsewhere, the UK PM May will meet with Ms Merkel this Friday at Berlin to discuss Brexit with a press briefing afterwards. In the US, after President Trump call for a “reciprocal tax” on imports against higher tariff countries earlier in the week as part of his 2019 budget speech, an unnamed senior White House official told Bloomberg that no proposals for such tax was in the works and the President may be simply reiterating his long held sentiments. Notably, President Trump has the power to impose such trade penalties on his own. Back in Europe, the ECB’s Draghi noted the blockchain technology is “quite promising” and the ECB is “very interested” in its potential usage. However, for now “it’s still not secure for central banking and we need to investigate it more”. Elsewhere, he reiterated that bitcoins are not considered as a proper currency. Finally, our European economics team have provided an update on what recent market developments means for the ECB. They note that their euro area financial conditions index is at the lowest level since mid-2014, just before the start of ECB unconventional monetary policy. However, they argue that strong economic momentum and the maturing economic cycle may add resilience in the face of tighter financial conditions, and they find that core inflation will continue to satisfy the policy exit criteria if the current level of financial conditions is maintained. Overall, they note that a gradual tightening in financial conditions is the ECB’s objective. Refer to their note for more details. Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the January NFIB small business optimism index was above market at 106.9 (vs. 105.3) and slightly below the 34 year high of 107.5 back in November. In the UK, the January CPI was also above market at -0.5% mom (vs. -0.6%) and core CPI at 2.7% yoy (vs 2.6% expected). Elsewhere, both the core PPI and RPI were slightly lower than expectations. The core PPI was 2.2% yoy (vs. 2.3%), while the RPI was -0.8% mom (vs. -0.7%) with annual growth of 4%. Finally, the December house price index rose 5.2% yoy (vs. 4.9% expected) driven by Scotland and Southwest England, while London was the weakest at +2.5%. In France, its 4Q wages index was slightly below market at 0.1% qoq (vs. 0.2%) but still up 1.3% yoy. Looking at the day ahead, the key focus is clearly the January CPI report in the US, while January retail sales will also be released alongside it. December business inventories is the other data release due in the US while in Europe we’ll get Q4 GDP in Germany (second estimate) and the final January CPI revisions, along with Q4 GDP for the Euro area (second estimate). Away from data the Bundesbank’s Weidmann is due to speak in the morning, followed by the ECB’s Mersch. German Chancellor Merkel is also due to speak at a CDU event. CISCO, and Credit Agricole will report earnings
Европейские фондовые индексы выросли в среду, в то время как инвесторы оценивали выпуск корпоративных отчетов о доходах и экономических данных. Сводный европейский индекс Stoxx 600 вырос на 0,56 процента во время утренних сделок, причем почти все сектора и крупные биржи были на положительной территории. Акции СМИ были в среду лучшими исполнителями в Европе, увеличившись более чем на 1,2 процента. Британский вещатель Sky возглавил прирост сектора после того, как фирма объявила о том, что она сохранила свои позиции в прямых трансляциях футбольных матчей премьер-лиги. Его акции выросли более чем на 3 процента на новостях. Рассматривая отдельные акции, Credit Suisse сообщила о чистом убытке в размере 983 миллионов швейцарских франков (1,1 миллиарда долларов) за 2017 год в среду. Второй по величине банк Швейцарии назвал в качестве причины налоговые списания в США уже третий год подряд. Акции снизились на около 2 процентов в среду утром. Между тем, Credit Agricole из Франции опубликовал 33-процентный прирост прибыли за последние три месяца 2017 года, поскольку результаты его инвестиционно-банковской деятельности превзошли ожидания в сложных рыночных условиях. Его акции были на 2,5 процента ниже во время утренней торговли. Немецкий ThyssenKrupp также сообщил о прибылях в преддверии открытия биржи в среду. Промышленно-технологическая группа заявила, что операционная прибыль в первом квартале выросла более чем на треть в результате восстановления ее стального блока. Его акции находились под давлением вскоре после открытия рынков. На текущий момент: FTSE 7215.86 47.85 0.67% DAX 12270.75 74.25 0.61% CAC 5143.50 34.26 0.67% Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Французский кредитор Credit Agricole зафиксировал ощутимое повышение квартальной прибыли, несмотря на увеличение налоговых расходов. Так, в четвертом квартале чистая прибыль кредитора выросла на 33% г/г до 387 млн евро ($477,2 млн) при средних прогнозах аналитиков на уровне 610,8 млн евро. Тем временем, выручка за рассматриваемый период увеличилась на 1,6% г/г до 4,65 млрд евро, а налоговые расходы повысились с 461 млн евро годом ранее до 703 млн евро. Кредитор также объявил, что выплатит дивиденды в размере 0,63 евро на акцию по сравнению с 0,60 евро на акцию годом ранее.
Французский кредитор Credit Agricole зафиксировал ощутимое повышение квартальной прибыли, несмотря на увеличение налоговых расходов. Так, в четвертом квартале чистая прибыль кредитора выросла на 33% г/г до 387 млн евро ($477,2 млн) при средних прогнозах аналитиков на уровне 610,8 млн евро. Тем временем, выручка за рассматриваемый период увеличилась на 1,6% г/г до 4,65 млрд евро, а налоговые расходы повысились с 461 млн евро годом ранее до 703 млн евро. Кредитор также объявил, что выплатит дивиденды в размере 0,63 евро на акцию по сравнению с 0,60 евро на акцию годом ранее.
Согласно мнению аналитиков французского банка Credit Agricole, пара EUR/CHF обладает хорошим потенциалом к росту. Из-за высокой вероятности вмешательства Швейцарского национального банка, эксперты склоняются к сценарию ослабления франка против единой европейской валюты. "ЦБ будет стараться обесценить национальную валюты. Мы советуем открывать покупки по EUR/CHF около отметки Chf1.1510 с прицелом к уровню Chf1.1800. Защитный стоп ордер рекомендуем установить на Chf1.1280. Для регулятора все еще важно, чтоб франк был слабым. Восьмого февраля пара уже достигла минимального значения с октября месяца, что повышает вероятность вмешательства со стороны ШНБ" - заявили в Credit Agricole. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Швейцарский франк может ослабнуть по отношению к евро, так как высок риск вмешательства центрального банка с тем, чтобы ограничить силу нацвалюты, считает Мануэль Оливери, валютный стратега Credit Agricole CIB. Эксперт рекомендует покупать пару EUR/CHF на уровне 1.151 читать далее…
Stock may have suffered through one of their most volatile weeks in years triggered by the unexpectedly large (if miscalculated) spike in January wages, the highest since 2009, resulting in the biggest volquake in history, and come this Wednesday it may be time for round 2, because at 8:30am on Valentine's Day, the U.S. inflation report - far more closely watched than the payrolls release - will hold the key to the next phase. Indeed, as Deutsche Bank notes: "it's hard to remember a data point as eagerly anticipated as next Wednesday’s January CPI report in the US. With rates, equities and vol selling off aggressively and markets on edge, the strong January average hourly earnings print this time last week has caused havoc in the market over the last few days." Why is the fate of the market suddenly in the hands of the otherwise trivial CPI number? Because, as we showed every day last week, every single time the 10-year Treasury approached or surpassed the four-year high of 2.85% last week, equities investors panicked and yanked bids amid fears the specter of higher inflation would accelerate the pace of Fed rate hikes, crushing the nearly 10 year artificial bull market in stocks bought with nearly $20 trillion in central bank liquidity. This is shown in the BBG chart below. And with average hourly earnings reportedly breaking out, there is suddenly a threat that core CPI may surprise to the upside, and not just modestly, but materially enough for the Fed - which is already expecting to hike rates 3 times in 2018 - to precipitate its tightening intentions, and if nothing else, certainly not intervene during the current market correction. “What’s happening now is just price discovery between bonds and equities -- how far can the bond market push yields up before the equity market cracks?” T. Rowe Price's Stephen Bartolini told Bloomberg . "The big fear in risk markets is that we get a big CPI print and it validates the narrative that inflation is coming back and the Fed is going to have to move faster.” While the re-emergence of wage growth - long considered the missing link in an economic recovery that’s driven the jobless rate to near record lows - took the market by surprise, what is more curious is that at least on paper, the Fed's intentions had been widely priced in: just before the stocks meltdown, traders were allegedly in sync with FOMC projections of three rate increases in 2018. However, the recent spike in longer-yields was the result of the bipartisan Senate plan, which would boost spending by an addition $300 billion, an increasing Treasury issuance even further, and beyond the $1 trillion projected this year. Stocks have not taken that well. That said, bond bulls remain: “The Treasury market is pricing in the most bearish scenarios that were on the docket for 2018, and still 10-year yields remain stubbornly below 3 percent,” BMO Capital Markets strategists Ian Lyngen and Aaron Kohli wrote in a Feb. 9 note. To the BMO due there’s a greater risk of yields declining over the next several months than rising. However, skeptics will be silenced promptly on Wednesday should the CPI/Core print higher than the expected, in which case a 3% on the 10Y becomes virtually certain, and unless stocks find some pressure outlet to relieve concerns of rising inflation - ideally a statement by some central banker - the next sharp move lower in stocks will immediately follow. As Bloomberg notes, at least some speculators expect such an outcome: Block trades in puts on 10-year Treasury futures Friday pointed toward demand for protection against yields rising to that level by March 23. So with that in mind, and with everyone's eyes on Wednesday's CPI report, here is what else to look for in the coming week: Feb. 12: Monthly budget statement Feb. 13: NFIB small business optimism; revisions to producer price index Feb. 14: CPI; MBA mortgage applications; retail sales; real average weekly and hourly earnings; business inventories Feb. 15: Empire manufacturing; initial jobless claims and continuing claims; PPI; Philadelphia Fed business outlook; industrial production; capacity utilization; Bloomberg consumer comfort; NAHB housing market index; Treasury International Capital flows Feb. 16: Import and export price indexes; housing starts; building permits; University of Michigan survey data And summarized courtesy of Barclays: * * * Below is Deutsche Bank's take: It's hard to remember a data point as eagerly anticipated as next Wednesday’s January CPI report in the US. With rates, equities and vol selling off aggressively and markets on edge, the strong January average hourly earnings print this time last week has caused havoc in the market over the last few days. Current market expectations are for a +0.4% mom headline reading and +0.2% mom core reading, which translate into +2.0% and +1.7% yoy readings (both a decline of one-tenth from December). Meanwhile the other potentially big event next week is in Washington with President Trump expected to release a $1.5tn infrastructure plan (which will kick off the process for producing legislation) and also his 2019 budget blueprint. There is other important data out in the US next week too with the January PPI report on Thursday another significant inflation reading, while Wednesday will also see January retail sales released. January industrial production (Thursday), January housing starts and building permits (Friday) and the preliminary February University of Michigan consumer sentiment survey (Friday) will also be released. In Europe we’ll get final January CPI revisions in the UK (Monday) and Germany (Tuesday) while second readings of Q4 GDP will be out in Germany and the Euro area on Wednesday. Late on Tuesday we’ll also get Japan’s Q4 GDP print. It’s also looking like a busy week for ECB speakers with Weidmann (Wednesday), Mersch (Wednesday and Thursday), Praet (Thursday) and Coeure (Friday) all scheduled to speak. The Fed’s Mester will speak on Tuesday. Finally it’s worth noting that Chinese New Year kicks off on Thursday, with mainland markets subsequently shut until February 21st. What to look out for next week? Monday: With data fairly thin on Monday all eyes will instead be on the White House with President Trump expected to release a $1.5tn infrastructure plan, along with his 2019 budget blueprint. Away from that the only data of note is the January monthly budget statement in the US. Heineken will report earnings. Tuesday: A busier day for data with the January CPI/PPI/RPI report in the UK the main focus. In the US the January NFIB small business optimism print will be released while in Japan the preliminary Q4 GDP print will be out in the late evening. Away from data the Fed’s Mester is due to speak in the afternoon on monetary policy and the economic outlook. Pepsico will release earnings. Wednesday: Front and centre on Wednesday is the January CPI report in the US, while January retail sales will also be released alongside. December business inventories is the other data release due in the US while in Europe we’ll get Q4 GDP in Germany (second estimate) and the final January CPI revisions, along with Q4 GDP for the Euro area (second estimate). Away from data the Bundesbank’s Weidmann is due to speak in the morning, followed by the ECB’s Mersch. German Chancellor Merkel is also due to speak at a CDU event. CISCO, and Credit Agricole will report earnings. Thursday: Another busy day for data with January PPI, January industrial production, February empire manufacturing, February Philly Fed PMI, February NAHB housing market index and the latest weekly initial jobless claims readings all due in the US. In Europe Q4 employment data in France and the December trade balance for the Euro area are due. The ECB’s Mersch and Praet are also slated to speak at an event in Paris. It’s with noting that New Year celebrations in China will also begin on Thursday, with mainland markets subsequently shut until the 21st. Nestle will report earnings. Friday: The end of the week will see January retail sales data released in the UK, along with the January import price index, January housing starts and building permits and the preliminary February University of Michigan consumer sentiment reading in the US. The ECB’s Coeure will also speak in the morning. Coca-Cola, and Kraft Heinz will all report earnings. * * * Finally, here is Goldman with its breakdown of key US events together with consensus forecasts: The key economic releases next week are CPI and retail sales on Wednesday and Industrial production on Thursday. There is one speaking engagement from a Fed official this week, on Tuesday. Monday, February 12 02:00 PM Monthly budget statement, January (consensus -$51.0bn, last -$23.2bn). Tuesday, February 13 08:00 AM Cleveland Fed President Mester (FOMC voter) speaks: Cleveland Fed President Loretta Mester will speak at a breakfast event hosted by the Dayton Area Chamber of Commerce. Audience and media Q&A are expected. Wednesday, February 14 8:30 AM CPI (mom), January (GS +0.38%, consensus +0.3%, last +0.20%): Core CPI (mom), January (GS +0.22%, consensus +0.2%, last +0.24%); CPI (yoy), January (GS +1.98%, consensus +1.9%, last +2.1%); Core CPI (yoy), January (GS +1.71%, consensus +1.7%, last +1.8%): We estimate a 0.22% increase in January core CPI (mom sa), which would lower the year-over-year rate to +1.7%. Our forecast reflects a boost from January seasonality, and likely continued strength in shelter inflation. On the negative side, we expect a small drag from telephone hardware methodological changes. We estimate a 0.38% increase in headline CPI, reflecting firm consumer energy and food prices in January. 08:30 AM Retail sales, January (GS +0.2%, consensus +0.2%, last +0.4%); Retail sales ex-auto, January (GS +0.4%, consensus +0.5%, last +0.4%); Retail sales ex-auto & gas, January (GS +0.3%, consensus +0.4%, last +0.4%); Core retail sales, January (GS +0.3%, consensus +0.4%, last +0.3%): We estimate core retail sales (ex-autos, gasoline, and building materials) rose at a 0.3% pace in January. While the growth pace likely remains solid—reflecting a boost from strong service sector data and the January stock market rally— we anticipate some correction in the nonstore retailers category after a strong holiday shopping season. Given the further rise in (sa) gasoline prices and the decline in auto SAAR, we estimate 0.4% and 0.2% respective increases in the ex-auto and headline measures. 10:00 AM Business inventories (consensus +0.3%, last +0.4%) Thursday, February 15 08:30 AM PPI final demand, January (GS +0.2%, consensus +0.4%, last -0.1%); PPI ex-food and energy, January (GS +0.1%, consensus +0.2%, last -0.1%); PPI ex-food, energy, and trade, January (GS +0.1%, consensus +0.2%, last +0.1%): We estimate a 0.2% increase in headline PPI in January, reflecting a slight uptick in gasoline prices. We expect a smaller 0.1% increase in in the PPI ex-food, energy, and trade services category. In the December report, the producer price index was weaker than expected, reflecting softness in both core measures as well as in food and energy prices. 08:30 AM Philadelphia Fed manufacturing index, February (GS +21.3, consensus +20.6, last +22.2): We estimate the Philadelphia Fed manufacturing index edged down in February. It is possible the decline in January partially reflected the Bomb Cyclone storms. Commentary from industrials remains encouraging, and we expect the index to remain at expansionary levels. 08:30 AM Empire manufacturing survey, February (consensus +17.9, last +17.7) 08:30 AM Initial jobless claims, week ended February 10 (GS 230k, consensus 228k, last 221k); Continuing jobless claims, week ended February 3 (consensus 1,928k, last 1,923k): We estimate initial jobless claims ticked up by 9k to 230k in the week ended February 10. Continuing claims – the number of persons receiving benefits through standard programs – declined in the previous week and may continue their general downward trend since early January. 09:15 AM Industrial production, January (GS +0.5%, consensus +0.2%, last +0.9%); Manufacturing production, January (GS +0.4%, consensus +0.3%, last +0.1%); Capacity utilization, January (consensus 78.0%, last 77.9%): We estimate industrial production rose +0.5% in January, as the utilities category likely rose further and manufacturing rebounded from last month’s soft report. We expect manufacturing production rose +0.4%, reflecting strength in non-auto manufacturing. 01:00 PM NAHB homebuilder sentiment, February (consensus 72, last 72) Friday, February 16 08:30 AM Housing starts, January (GS +4.0%, consensus +3.3%, last -8.2%); We estimate housing starts rebounded 4.0% in January, reflecting a catch-up with the recently more resilient single-family permits, partially offset by unseasonably cold weather. 08:30 AM Import price index, January (consensus +0.6%, last +0.1%) 10:00 AM University of Michigan consumer sentiment, February preliminary (GS 94.8, consensus 95.5, last 95.7): We estimate the University of Michigan consumer sentiment index edged down 0.9pt to 94.8 in the preliminary estimate for February. We note the possibility of the recent stock market selloff over the last week to weigh on surveys conducted last week. The report’s measure of 5- to 10-year inflation expectations was 2.5% in January, near the middle of its 12-month range. Source: Barclays, DB, Goldman
Despite a very explicit warning by Goldman's co-head of equity trading that the "regime has changed" and that instead of "buying the dip", investors should be "selling-the-rip", so far this morning a global BTFD relief rally from Asia to Europe has welcomed a rare respite from volatility as U.S. stock futures surged after a week that saw two of the biggest single-day percentage drops in seven years, with the Dow set to open some 300 points higher after Friday's torrid last hour surge. And as investors await today’s revised monthly budget statement, one which reportedly will no longer balance over the next 10 years, sending the dollar sliding in the process, S&P futures are about 30 handles higher, flirting with 2,650, some 100 points higher from the lows observed around noon on Friday. S&P 500 futures jumped 1.2%, following a weekly decline that at one point was the largest since the financial crisis. Futures on the Dow Jones Industrial Average added 1.3 percent, while those on the Nasdaq 100 Index were up 1 percent. Meanwhile, the VIX fell 11% extending its drop to a second day after JPM wrote on Friday that the worst of the vol spike "unwind" by CTAs, risk parities and vol-targeting funds is behind us. Traders have been on edge following tumultuous moves in equities last week, which saw the S&P 500 post its worst week in two years with a 5.2% decline on fears over interest rate hikes, ending a stretch of 588 days without a 5% drop. However, what has been most surprising about today's session is that Ten-year Treasury yields climbed on Monday, touching a fresh four-year high amid growing inflation fears, worries about the surging US deficit, and concerns the Federal Reserve may accelerate its rate-hike schedule even as it continues to shrink its balance sheet. The 10Y yield rose as high as 2.8930%, yet unlike last week this has - so far - not been enough to dent the equity enthusiasm. The Treasury curve flattened, with futures edging further lower led by belly, EGB peripheral spreads see minor tightening given general risk-on; iTraxx Crossover also tightens ~12bps. Germany’s 10-year yield increased three basis points to 0.77 percent, the highest in more than two years. Britain’s 10-year yield rose five basis points to 1.605 percent, the highest in almost 22 months. European equities rebounded on Monday from the worst weekly sell-off in two years with share prices firming in opening trading. Europe's Stoxx 50 index climbed some 1.9%, led by miners as European bourses catch up with the gains seen late on Wall Street on Friday with macro newsflow otherwise light in the region. Sector wise, material names outperform i nfitting with some of the price action seen in the complex during Asia-Pac trade, energy names are also higher as energy prices continue to retrace some of the losses seen on Friday. In terms of stock specifics, Heineken (-4.2%) are seen lower after their earnings report was clouded by currency effects, Akzo Nobel (+1.7%) have been in focus today after reports in the FT suggesting the Co.’s chemicals unit has been subject to PE interest, Barclays (+1%) have been charged by the SFO regarding their Qatari loans and Airbus (-1.2%) are lower amid reports that they have stopped delivering A320neo jets due to issues with Pratt &Whitney engines. Asia similarly surged, with South Korean equities and the won rose after North Korean leader Kim Jong Un invited his counterpart to meet. Vice President Mike Pence told the Washington Post the U.S. is ready to engage in talks about North Korea’s nuclear program, signaling a shift in policy. The won outperformed major currencies. Japan’s markets are closed for a holiday. Elsewhere, Hang Seng (-0.2%) and Shanghai Comp. (+0.8%) were positive ahead of this week’s Lunar New Year celebrations, while most of the Asia peripheries traded with cautious gains amid a lack of drivers and with various holiday closures scheduled through to next week. China's ChiNext index of small-cap and tech shares jumped after the government was said to call on companies and mutual funds to boost the stock market. The ChiNext rose 3.5% in Shenzhen, its biggest gain since July 27, after falling to a three-year low Friday. "The news about government support eased some worries,” said Shen Zhengyang, Shanghai-based strategist with Northeast Securities Co. “People are hunting for bargains, especially smaller companies that fell too much in the recent rout” Others were more cautious: “Futures can move around quite a bit, but what I will be watching for is a stable ‘green’ in the futures coming into tomorrow,” BB&T's Walter “Bucky” Hellwig told Bloomberg. "“This will show that the S&P didn’t hold on to its 200-day moving average by accident, and this confidence is going to pull more buyers into the market.” To be sure, with Japan closed for holiday, and virtually no economic events and market drivers so far on Monday (this will change with Wednesday's CPI release) has led to an extremely muted European session. Meanwhile, the USD is weaker across the board after Sunday reports that the Trump budget to be released today will not only increase the US deficit but - for the first time under a Republican president - won't balance over 10 years. Other major currencies were rangebound, USD/ZAR drifts lower in anticipation of Zuma departure, RUB rallies with crude. Some other pairs from Bloomberg: EUR/USD rises as much as 0.4% to 1.2297 before paring as take-profit offers cap pair for now, volumes relatively muted amid Japan holiday GBP/USD edges up as as U.K. Prime Minister Theresa May embarks this week on a push to bring her divided Cabinet together and flesh out a Brexit strategy USD/JPY falls modestly AUD/NZD rises as cross bounces off 1.0750 area for the fifth time in as many days helped by macro flows The dollar’s decline supported commodities, with metals higher and crude oil halting a six-day selloff. Both WTI and Brent crude futures have continued to retrace Friday’s losses despite Friday’s Baker Hughes rig count showing a climb of 26 oil rigs. In terms of energy newsflow, UAE energy minister stated the energy market is to balance this year with shale oil output to be absorbed by rising 2018 demand. In metals markets, spot gold is seen higher alongside the softer USD, although gains are likely being capped by this morning’s risk environment. Elsewhere, copper prices have recovered from their two month lows during London trade while Chinese iron ore futures were seen lower overnight after recent rampant gains ahead of the Lunar New Year which kicks off this Thursday. And while there are few notable economic releases today, looking ahead investors will await U.S. consumer-price data on Wednesday with some trepidation. Pressure on equities has been emanating from the Treasury market and in the outlook for inflation, and any upside surprises will likely resume the positive correlation between bond and stock prices. In geopolitical developments, North Korea invited South Korean President Moon for talks in Pyongyang, while President Moon stated that they should make preparations to realize the meeting. At the same time, a US official stated that there is no differences between US, South Korea and Japan on need to isolate North Korea until it gives up its nuclear weapons program. There were also some notable central bank comments overnight, with BoE’s Haldane saying that minor interest rate increases are likely to be introduced later this year, while he also stated that inflation is currently running above target and that’s one of the factors interest rates were hiked last year. BoE Vlieghe said that if there are less credit headwinds, this may signal that the UK is ready for higher rates, there is increased evidence that a tight labour market is having upward effects on wages, also stating that rise in UK debt burden not sustainable if continues for many years. ECB’s Nowotny said that the ECB is concerned regarding US attempts to politically influence FX rates. Nowotny also added that said that EU inflation still has room to increase so the ECB is still on the careful side, although that certainly won’t last forever and that there will be a need for higher interest rates in the foreseeable future. ECB’s Visco said ECB will be patient on pursuit of its inflation goal and that it has been challenging to push up inflation expectations. This week earnings season continues in full swing with reports from Bunge, TripAdvisor, SunPower, Con Edison, Bombardier, Heineken, Loews, Michelin, PepsiCo, MetLife,Cisco, Japan Post Bank, Credit Suisse, Nestle, Airbus, Allianz, Telstra, Coca-Cola, Deere, Eni, Credit Agricole and Campbell Soup. Bulletin Headline Summary from RanSquawk European bourses catch up to the gains seen late Friday on Wall Street A relatively quiet start to the week in FX, partly due to Japan’s market holiday, but also as many participants simply take some time out after the hectic sessions of late Looking ahead, today sees a lack of tier 1 highlights Market Snapshot S&P 500 futures up 1.2% to 2,649.25 Brent Futures up 2.2% to $64.18/bbl Gold spot up 0.4% to $1,321.31 U.S. Dollar Index down 0.3% to 90.21 STOXX Europe 600 up 1.6% to 374.31 MXAP up 0.4% to 171.13 MXAPJ up 0.6% to 557.88 Nikkei down 2.3% to 21,382.62 Topix down 1.9% to 1,731.97 Hang Seng Index down 0.2% to 29,459.63 Shanghai Composite up 0.8% to 3,154.13 Sensex up 1% to 34,329.57 Australia S&P/ASX 200 down 0.3% to 5,820.70 Kospi up 0.9% to 2,385.38 German 10Y yield rose 3.7 bps to 0.782% Euro up 0.2% to $1.2271 Brent Futures up 2.2% to $64.18/bbl Italian 10Y yield rose 5.4 bps to 1.779% Spanish 10Y yield fell 0.4 bps to 1.476% Top Overnight News from Bloomberg President Trump will seek billions of dollars in new spending to build a border wall, improve veterans’ health care and combat opioid abuse in a budget proposal that’s likely to get little traction in a Republican Congress that has its own, very different spending priorities OMB’s Mulvaney: U.S. will post a larger budget deficit this year and could see a “spike” in interest rates as a result In a break from a longstanding Republican goal, the plan won’t balance the budget in 10 years, according to a person familiar with the proposal The U.S. is ready to engage in talks about North Korea’s nuclear program even as it maintains pressure on Kim Jong Un’s regime, Vice President Mike Pence said, signaling a shift in American policy The U.K. economy is ready for slightly higher rates, BOE’s Vlieghe says on a panel in London Reports of Prime Minister Shinzo Abe’s plan to nominate Haruhiko Kuroda for another term as chief of the Bank of Japan is seen as easing pressure on the yen BOE’s Vlieghe: U.K. economy ready for slightly higher rates ECB’s Nowotny says euro-area inflation has room to move higher so ECB is still on the careful side; Visco says risk of deflation averted, forex volatility seen as main risk for inflation German Chancellor Angela Merkel said she’s determined to serve another full term, rebuffing party critics who say she sold out to the Social Democrats to extend her 12 years in office China Jan. M2 Money Supply: 8.6% vs 8.2% est; New Yuan Loans 2.9t vs 2.1t est; Agg. Financing 3.1t vs 3.2t est. Asia equity markets began a holiday-quietened week mostly positive in which the region got a mild lift as US equity futures extended on Friday’s late rebound. However, upside was contained with Japan away in observance of National Founding Day, while the ASX 200 (-0.3%) was the laggard as energy names reeled from last week’s drop in crude prices and with financials subdued as the Royal Banking Commission started its inquiry into the industry. Elsewhere, Hang Seng (-0.2%) and Shanghai Comp. (+0.8%) were positive ahead of this week’s Lunar New Year celebrations, while most of the Asia peripheries traded with cautious gains amid a lack of drivers and with various holiday closures scheduled through to next week. PBoC skipped open market operations. Top Asian News China Is Said to Call on Companies, Mutual Funds to Boost Stocks China New Loans Hit Record on Seasonal Boost, Shadow Bank Curbs Chinese Tourists Are Taking Over the Earth, One Selfie at a Time Singapore Seen Leading Race to Tax $38 Billion Shopping Boom China’s Jan. New Loans 2.9T Yuan; Est. 2.05T Yuan European equities have kicked the week off on the front foot (Eurostoxx 50 +1.9%) as European bourses catch up with the gains seen late on Wall Street on Friday with macro newsflow otherwise light in the region. Sector wise, material names outperform infitting with some of the price action seen in the complex during Asia-Pac trade, energy names are also higher as energy prices continue to retrace some of the losses seen on Friday. In terms of stock specifics, Heineken (-4.2%) are seen lower after their earnings report was clouded by currency effects, Akzo Nobel (+1.7%) have been in focus today after reports in the FT suggesting the Co.’s chemicals unit has been subject to PE interest, Barclays (+1%) have been charged by the SFO regarding their Qatari loans and Airbus (-1.2%) are lower amid reports that they have stopped delivering A320neo jets due to issues with Pratt &Whitney engines. Top European News Barclays Bank Unit Charged by SFO Over 2008 Qatar Loan Deal ECB’s Nowotny Says Central Banks’ Task Isn’t to Satisfy Markets TDC Withdraws Recommendation of MTG Transaction After Bid999 Kazakh Halyk Bank Weighs Dividend as CEO Predicts Excess Capital Berlusconi Papers Over Cracks in Alliance: Italy Campaign Trail In FX, a relatively quiet start to the week, partly due to Japan’s market holiday, but also as many participants simply take some time out after the hectic sessions of late. The Usd is modestly weaker vs all its G10 peers bar the Kiwi, and then only just as Nzd/Usd nestles around 0.7250 and Aud/Nzd remains below 1.0800 – Aud/Usd maintaining 0.7800+ status. Cable has ticked up towards the top of a 1.3810-1.3875 range on little obvious Sterling supportive news or factors aside from further BoE rhetoric underscoring more policy tightening (albeit gradual), while Eur/Usd is mid-way between 1.2245-95 parameters amidst more qualms registered by ECB’s Nowotny about the US exerting political influence on exchange rates. Usd/Jpy even more contained within a 108.50-108.95 band, as are Usd/Chf and Usd/Cad in 0.9370-0.9400 and 1.2600-1.2555 ranges awaiting more direction – via stock market developments and US CPI data for example. The Dollar index is keeping its head above the 90.000 level with the latest weekly CFTC reports on spec positioning showing a slightly less short Greenback base, along with the Jpy, while Eur and Gbp longs lighten up a bit and Loonie longs increase their Cad holdings. In terms of option expiries, nothing really of note or in size for today’s NY cut. In commodities, both WTI and Brent crude futures have continued to retrace Friday’s losses despite Friday’s Baker Hughes rig count showing a climb of 26 oil rigs. In terms of energy newsflow, UAE energy minister stated the energy market is to balance this year with shale oil output to be absorbed by rising 2018 demand. In metals markets, spot gold is seen higher alongside the softer USD, although gains are likely being capped by this morning’s risk environment. Elsewhere, copper prices have recovered from their two month lows during London trade while Chinese iron ore futures were seen lower overnight after recent rampant gains ahead of the Lunar New Year which kicks off this Thursday. North Sea Forties pipeline is now said to be in full operation, according to sources. Phillips 66 reports a unit upset at wood river, Illinois refinery; the refinery has a crude capacity of 314K bpd. With data fairly thin on Monday all eyes will instead be on the White House with President Trump expected to release a $1.5tn infrastructure plan, along with his 2019 budget blueprint. Away from that the only data of note is the January monthly budget statement in the US. US Event Calendar 2pm: Monthly Budget Statement, est. $51.0b, prior $51.3b DB's Jim Reid concludes the overnight wrap Are we potentially set for a Valentine’s Day sell-off on Wednesday for markets or will Cupid fire some dovish arrows for the market. Indeed we can’t remember a more eagerly anticipated number than the US CPI release on the most romantic day of the year. It’s near impossible to predict one number but our bias continues to be for higher inflation than expected in 2018. This number has been slightly complicated as the BLS have recently made some seasonal adjustments. Before this, January's print (i.e. this week's number) had consistently exceeded expectations in the last 25 years and February's had consistently missed. So all a bit uncertain. Our economists also think we should watch healthcare inflation which is due some upside surprise soon. We'll fully preview on Wednesday but that'll be the focal point for the week and the focal point for pretty much every month this year in our opinion. Other data will pale into insignificance this week but you can see what’s in store at the end of this report. It’s also worth mentioning that today President Trump is expected to release a $1.5tn infrastructure plan (which will kick off the process for producing legislation) and also his 2019 budget blueprint. Given the tax reform, the recent budget concessions to keep the government open, and this infrastructure plan, it’s no surprise to see investors looking at whether government bond yields are too low regardless of inflation. It’s also worth noting that it’s a half-term week in the UK and parts of Europe so that could add to the liquidity fun and games in either direction. On a similar vein Chinese New Year kicks off on Thursday, with mainland markets subsequently shut until February 21st. Now recapping equities performance from Friday. European bourses were all lower after the negative leads from Asia, with key bourses down 1-1.5% (Stoxx 600 -1.45%; DAX -1.25%; FTSE -1.09%). Across the pond, the S&P exhibited large swings with a peak to trough intraday range of 4.1% before recovering throughout the day and closing 1.49% higher. The Dow (+1.38%) and Nasdaq (+1.44%) also advanced. Within the S&P, all sectors excluding energy were in the green, with gains led by the tech, real estate and utilities sectors. Elsewhere, the VIX also traded in a large range of c13pt (27.7 to 41.1) before closing 4.4pt lower to 29.06 (-13.2%). Over the weekend, the Nikkei reported Japan’s PM Abe intends to nominate Kuroda for a second five year term as BOJ Governor. Our Japanese strategist Yamashita expect the near term market impacts to be limited, in part as consensus was broadly expecting a reappointment. Looking ahead, he expects the current monetary easing framework to remain in the short term, but a normalisation bias is more likely down the track, albeit with actual action likely to be made on the condition of inflation reaching +1% and the government declaring a victory over deflation. If normalisation occurs, he expects a hike in the 10y JGB yield target to be the BOJ's first move towards normalization. ETF purchases are also likely to be scaled back sooner rather than later, although domestic stock prices will probably need to move back into an uptrend trend before that can happen. Refer to his note for more details. Following on, Nick Burns from my team has examined the potential headwinds for HY credit due to the spike higher in equity market volatility. We believe there will likely be a reversal from the current levels of equity market volatility, but credit spreads will likely come under pressure unless equity market volatility falls towards the lows seen during 2017. Further, he has also looked at how the technicals seem to be less supportive in the early stages of 2018 than they have been in recent years. Refer to his note for more details. This morning in Asia, markets are modestly higher. The Hang Seng (+0.58%), Kospi (+1.18%) and China’s CSI 300 (+0.81%) are all up while the ASX 200 is down 0.30% as we type. Elsewhere, the Japanese market is closed today for a holiday and WTI is rebounding c1%. Now recapping other market’s performance from Friday. In government bonds, earlier risk aversion seemed to help core European 10y bond yields to fall 2-5bp (Bunds -1.8bp; Gilts -4.6bp) while peripherals yields rose 3-7bp. Turning to currencies, the US dollar index strengthened 0.24% while the Euro was broadly flat and Sterling fell 0.62%, weighed down by the softer than expected prints on IP and trade deficits. In commodities, WTI oil fell 3.19%, in part as the Baker Hughes US rig count posted its biggest weekly increase in more than year. Elsewhere, precious metals softened (Gold -0.16%; Silver -0.34%) and other base metals also weakened (Copper -1.41%; Zinc -0.69%; Aluminium -0.81%). Away from markets, the US Budget director Mulvaney noted that rising budgets deficits are “a very dangerous idea, but it’s the world we live in” and the “US will post a larger deficit this year and could see a spike in interest rates, but lower deficit are possible over time given sustained economic growth”. Elsewhere, Congress has officially passed the two year spending deal with our US economists expecting the c$300bln increase in spending to potentially add several tenths to their 2018 and 2019 growth forecasts of 2.6% and 2.1% (Q4/Q4) respectively, subject to more details from the deal. Over in Germany, the BamS has reported the SPD leader Martin Schulz will be replaced on Tuesday when the SPD leadership meets. The BamS did not say how it got the information but noted Andrea Nahles will be appointed as acting party Head. Earlier on Friday, Mr Schulz has “declared his withdrawal from a (proposed) role in the federal government” but said he wanted party members to vote in favour of the coalition government with Ms Merkel’s bloc. Elsewhere, Ms Merkel noted that it’s acceptable to give the finance ministry post to the SPD and that “a finance minister can’t just do what he wants”. Finally onto central banks commentaries. The ECB’s Nowotny noted the recent equities sell off as “a normalisation” and that “…the task of central banks isn’t to satisfy markets but to ensure economic stability. So if necessary, rates will have to rise and markets will have to adapt to that”. On QE, he said “…I don’t think we will need it (after September), at least not in its current form”. On inflation, he noted it still has room to move higher, so the ECB is still on the careful side, but that won’t last forever, as “in the foreseeable future there will be a need for the ECB to raise rates…” In the UK, the BOE’s Haldane said “some further tightening of policy might be needed over the period ahead”, but the BOE is “in no rush” to do so. He added rates in the UK “won’t remotely go back to levels we’ve seen in the past, but nonetheless keeping the cost of living under control is….the single best and most important thing we can do to help the economy”. We wrap up with other data releases from Friday. In the US, the final reading of the December wholesale inventories was revised upward to 0.4% mom (vs. 0.2% expected). Overall,the Atlanta Fed's GDPNow model now estimate that the US economy will grow 4.0% saar in 1Q, while the NY Fed’s estimate is c3.4% saar. In Europe, both France and Italy’s December IP was above market, at 4.5% yoy (vs. 3.5% expected) and 4.9% (vs. 1.9% expected) respectively. Conversely, a fall in output in the oil and gas and mining sectors contributed to a lower than expected December IP in the UK, at -1.3% mom (vs. -0.9%) and 0% yoy (vs 0.4%), while its December trade deficit widened to -£4.9bln (vs. -£2.4bln expected). Exports for the month rose 0.8% mom, while imports rose an even stronger 3.0% mom. With data fairly thin on Monday all eyes will instead be on the White House with President Trump expected to release a $1.5tn infrastructure plan, along with his 2019 budget blueprint. Away from that the only data of note is the January monthly budget statement in the US. Heineken will report earnings.
Значительное укрепление фунта в этом году - включая его самый сильный ежемесячный рост с 2009 года в январе - закончилось, и опасения по поводу Брекзита снова начнут взвешивать на валюту, выявил опрос Reuters, в котором приняли участие рыночные стратеги. Фунт обвалился примерно на 10,5% на торгово-взвешенной основе после референдума в июне 2016 года, когда Великобритания проголосовала за выход из Европейского союза. Но он вырос примерно на 6,5% от самой низкой точки, достигнутой в октябре 2016 года. По сравнению с фондовыми рынками, валюты в последние несколько дней оставались относительно устойчивыми. После того, как в среду фунт зафиксировал свое четвертое сессионное падение подряд, он сильно подорожал в четверг, причиной чему были итоги заседания Банка Англии. Ежемесячный опрос Reuters выявил, что британский фунт, как ожидается, будет торговаться на уровне $1,40 через месяц, на отметке $1,39 через шесть месяцев и на $1,40 через год, согласно медианному мнению более 60 валютных специалистов, опрошенных на прошлой неделе. Тем не менее, последние прогнозы указывают на резкое повышение оценок по сравнению с январским опросом после недавнего восхождения фунта. "Фунт был хорошо поддержан в этом году, в основном на фоне ожиданий стабильной денежно-кредитной политики. Забегая вперед, мы полагаем, что риск ухудшения фундаментальных показателей останется, в то время как неопределенность, связанная с Брекситом, может снова повыситься", - отмечают аналитики Credit Agricole. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Вот что пишет автор (5 февраля) про пузырь в Сбере: «Сбербанк в пятницу обогнал по капитализации таких европейских мега гигантов, как Deutsche Bank, BNP Paribas, Societe Generale, Credit Agricole, UBS Group, Credit Swiss, RBS Group и Lloyds Banking, став самым дорогим европейским банком за исключением HSBS, но у него активов в 6 раз больше. Более того, позади Morgan Stanley и Goldman Sachs!!! Сравните мировое влияние Сбербанка, которое равно нулю или около него и Goldman Sachs?! С 15 июня Сбербанк вошел в топ 1% самых быстрорастущих акций планеты с капитализацией больше 10 млрд долл. По отношению капитализация к капиталу Сбербанк находится на втором месте, опережая мега структуры типа JP Morgan Chase (по 27 млрд прибыли в год) и Wells Fargo (23 млрд прибыли в год). События беспрецедентные, т.к. речь идет о самых влиятельных финансовых структурах мира (группа бангстеров), который собственно и определяют современную архитектуру финансовой системы, контролируя глобальные денежные потоки, и формируют стоимость активов. Сбербанк опередил их по финансовым коэффициентам при том, что американские банки в фазе 100 летнего пузыря (т.е. на хаях) и помимо этого всегда торговались с существенной премией к мировым аналогам, а в России наоборот дисконт. Все это лишь подчеркивает масштаб пузыря в Сбербанке и все эти разговоры про супер-Грефа, супер-акцию и супер-банк закончатся очередным Газпромом. А прогнозы про 1 трлн прибыли при мертвой экономике весьма сюрреалистичны, хотя мы помним, что более 1.5 трлн прибыли Газпрома (еще тех, дорогих рублей) не помогали ему стоить дорого, а ведь все тоже неплохо начиналось с прогнозами в 2007 о 1 трлн долл (!) капитализации. Как говорится, помним, скорбим. Ну а пока наблюдаем за разрывом 100 летнего пузыря в США (американский фондовый рынок) и 10 летнего пузыря в России (Сбербанк). На падающем рынке всегда все прошлые лидеры становятся аутсайдерами.» Стоит задуматься!
We noted last night that, for now, it appears there is no contagion to other asset-classes from the explosion in equity volatility expectations... While rates, FX, and oil vol has picked up, it remains notably low (and well below longer-term averages). Credit Agricole's Valentin Marinov explains why and what happens next... FX volatility gauges have clearly lagged behind other vol measures like VIX during the latest bout of escalating risk aversion. Indeed, whereas the VIX has recently hit its highest levels in almost seven years, our index of G10 USD-crosses implied volatility has barely managed to scale its highs from September 2017 and has remained well below its long-term averages. In addition, a look at the relative G10 performance since last week would highlight that the biggest losers were the European currencies like EUR, GBP, NOK and SEK rather than the ‘usual suspects’ AUD and especially NZD. At the same time, USD emerged victorious even against safe havens like JPY and CHF. It seems therefore that a positioning unwound rather than the FX sensitivity to risk aversion could explain the moves. Does the above discrepancy indicate that the FX markets are lagging the equity markets so that investors should turn even more negative on risk-correlated and commodity currencies? We think that cautiousness is certainty warranted and as a result we maintain our relatively bearish outlook for AUD and NZD in the near-term. That said, there are other factors that make us think that the FX volatility may continue to lag the equity volatility. The main reason seems to be the relatively subdued correlation between USD and US rates and UST yields. This has been attributed to the flattening of the UST curve that has been in place for most of 2017. In turn, this reflected investors’ belief that the Fed tightening cycle how now matured so that any future rate hike would have less of a positive impact on USD. All this also implies that the recent surge in UST yields is less positive for USD than it is negative for US stocks. There has been some contained bear steepening of UST curve since the start of February and this may explain the renewed recoupling between USD and the elevated US rates and UST yields that helped the dollar regain some ground across the board in the last few days. The question for us is whether this correlation will grow in intensity so that higher yields result in stronger USD, trigger more unwinding of USD-funded carry trades and thus fuel realized and implied FX volatility. That may indeed be the main risk in the near term especially if the Fed officials or a potential US government shutdown trigger further bear steepening of the UST curve. Over longer-term, however, the UST curve may resume its flattening trend and this should, once again, deprive USD from any US rates or UST yields support. As a result, the moves in the USD-crosses may remain relatively more contained than in the stock markets and the FX volatility may continue to lag the stock market volatility.
По итогам пятницы снижение S&P500 составило почти 4% за неделю – это самое сильное падение с 4 января 2016 (и минус 2.1% за день – последний раз сильнее падали только 9 сентября 2016). С 2012 года (т.е. за 6 лет) более масштабное снижение было лишь три раза (14 мая 2012, 17 августа 2015 и 4 января 2016). Событие, как минимум знаковое. Был зафиксирован рекорд по количеству дней без 3% коррекции с обновления предыдущего максимума – теперь 205 дней, дальше уже не пойдут, это история. Однако остается открытой серия по количеству дней без 6% коррекции. Судя по всему, ей осталось не долго жить.
Президент РФ Владимир Путин обсудил с представителями Экономического совета ассоциации "Франко-российская торгово-промышленная палата" дальнейшее развитие двустороннего торгово-экономического сотрудничества России и Франции.
Президент РФ Владимир Путин обсудил с представителями Экономического совета ассоциации "Франко-российская торгово-промышленная палата" дальнейшее развитие двустороннего торгово-экономического сотрудничества России и Франции.
Коллеги согласятся, на Западе есть два уважаемых финансовых блогера: американец Майк "Mish" Шедлок и француз Жан-Пьер Шевалье. Третьим я бы назвал японскую команду Nipponmarketblog, хотя последние по-восточному сдержаны в высказываниях... "Бальзамом на сердце" бывшему французскому резиденту - нашему уважаемому avvakoum станет информация, что французская уголовка начала преследование Шедлока и Шевалье за публикацию сомнений в подлинности балансов французских мегабанков Credit Agricole, BNP Paribas и Societe Generale. Блогеры оценили соотношение собственных средств этих банков к заёмным в пределах 1 к 27...50. Тогда же Wall Street Journal дал им оценку 1:23...33 - немногим лучше. Пять лет назад, в одном из первых постов ЗВР = корпоративные кредиты? я оценил активы русских комбанков в 40...8% от декларируемых. Низ - 8%, дальше - неминуемая разделка. Украина? - тоже самое. Через год глава русского Агентства по страхованию вкладов сообщил: активы санируемых банков стоят 5—7% от заявленных сумм. Кстати, тогда я поплатился лишь баном на "авантюре" - успел дать два поста под ником Кавич (привет для octorus :). Второй пост модеры потёрли, но ещё три дня "ура-авантюристы" рвали цитаты из удалённого контекста... Дело прошлое - я на тот форум не в обиде: вероятно, иначе не стал бы копать глубже... Писать через строку, иносказательно... Банкиры-пролетарии и без Шедлока с Шевалье загнаны в угол... Вульф Рихтер "testosterone pit" в статье с пафосным заголовком "Громкий всасывающий звук? Крах развивающихся рынков обрушит европейские банки" наивно считает, что "Сейчас время наживы закончилось. Только за одну неделю с 29 января $6.3 млрд было выведено с фондовых рынков развивающихся стран, это самый крупный отток с августа 2011 года." Закончилось? Что 6 млрд за неделю гипершакалам, готовым порвать в клочья мировую финсистему? Пыль.