The US Monthly Budget Statement (Feb) was $-215B v an expected $-216B, against a reading of $49.0B in the prior month. This data represents the balance of the federal government’s income and spending. The February number was the biggest decline in the budget since February of 2014. Seasonally, the February data is lower than other months due to variations that occur at this time of year and events that settle during the month. Receipts are at their lowest in this reading each year, while, for outlays, it is one of the highest, leading to a disparity. USDJPY sold off from 106.538 to 106.310 because of this data release. New Zealand RBNZ Governor Grant Spencer gave a speech titled “Getting the best out of macro-prudential policy” at the Reserve Bank of New Zealand. He made the following comments: The RBNZ is to review macro-prudential policies with the Treasury. He is keen to see macro-prudential develop as a credible and sustainable policy. Australian Home Loans (Jan) came in at -1.1% v an expected -0.1%, against a previous -2.3%. This is a volatile data point, with recent extremes between +5 and -6. This result shows a contraction in the number of loans for home purchases. Also released at this time was Investment Lending for Homes (Jan) data, coming in at 1.1% against a previous -2.6%. AUDUSD fell from 0.78743 to a low of 0.78661 after this data. Japanese Tertiary Industry Index (MoM) (Feb) came in at -0.6% against an expected -0.2%, from 0.0% previously, which was revised up from -0.2%. A lower than expected result is a slight worry for future economic health but inside recent ranges for this data point. USDJPY moved higher from 106.593 to 106.838 after this data was published. EURUSD is down -0.04% overnight, trading around 1.23290. USDJPY is up 0.42% in early session trading at around 106.856. GBPUSD is down -0.13% this morning, trading around 1.38860. Gold is down -0.28% in early morning trading at around $1,319.28. WTI is down -0.19% this morning, trading around $61.15.
Authored by Mike Shedlock via MishTalk, Guaranteeing things is an excellent business until it fails suddenly and completely. In the Great Financial Crisis guarantors were wiped out. It's happening now down under where 10,000 Property Buyers are Caught in the Collapse of Deposit Power. A leading national property finance company has collapsed potentially leaving an estimated 10,000 residential, commercial and property investors in the lurch about the fate of nearly $300 million worth of deposits. Deposit Power, which provided interim finance to property buyers, has closed its doors after the collapse of New Zealand's CBL's insurance, which was an issuer and guarantor of deposit bonds. Sale Complications Worried mortgage brokers, who recommended the products to clients, are seeking advice on whether clients need to buy other cover, or secure additional or replacement financial risk bonds. It could mean unspecified risks, uncertainty and deal delays for tens of thousands of counter parties, financiers and their representatives, including lawyers and other brokers. Mortgage brokers, who act as an intermediary between borrowers and lenders, are being warned the status of existing loan guarantees is unknown, pending applications will not be processed and no payments have been taken. Investors calling the Sydney-based office are being answered by a recorded message the company is facing "external issues" and that it is unable to process any deals. Deposit Power's bonds were sold to individuals, first time buyers, retirees, self-employed borrowers, trusts, corporate entities, or self managed super funds purchasing commercial or residential property. It was established in 2012 and regulated by the Australian Securities and Investments Commission. They were also heavily marketed to first time and off the plan property investors. A deposit guarantee is an alternative method of placing a deposit on a property. CBL in Interim Liquidation The New Zealand High Court last month ordered CBL Insurance be placed in interim liquidation on an application by the Reserve Bank of New Zealand as the insurer's prudential supervisor. In New Zealand, liquidators are warning those insured by CBL, or any beneficiaries of its policies, to seek advice on whether they need to buy other cover or secure additional, or replacement financial risk bonds. Information Lacking According to the article, CBL has yet to inform Australian liquidators about whether Sydney-based Deposit Power will fully, or partially, back the bonds. Here's a hint: When authorities shut down guarantors, it's because they have gone bust. The question is not whether anyone will be fully paid back, it's whether anyone will be paid back anything. Guarantee Scams Guarantors make money in good times but because of leverage they go bust in bad times. In the case of CBL, we see the true nature of its guarantee: It was worthless.
The new Federal Reserve Chairman, Jerome Powell, has recently hinted that the Fed could raise interest rates more quickly this year, causing the U.S. Dollar to surge. The Fed is now projected to overtake the Reserve Bank of New Zealand (RBNZ), which currently has one of the highest interest rates at 1.5%, by year-end. Furthermore, the RBNZ will only raise interest rates after inflation has made a sustainable return to the higher end of its 1% to 3% target. Against this backdrop, the New Zealand Dollar (NZD) appears to be heading lower against the U.S. Dollar due to the divergent monetary policy outlook. NZDUSD In the daily timeframe, NZDUSD found major resistance in the 0.7400-0.7500 zone, which has prevented the pair from upside progress for 2 years. The pair has now formed a double top, with a measured downside target of 0.7010. Near-term support is at the 38.2% retracement of 0.7180 and a break of this level could lead to further declines to support at 0.7138 and then the 61.8% retracement at 0.7073. A reversal and close above 0.7220 would negate the outlook with resistance at 0.72550. NZDJPY Weakness in the New Zealand Dollar, combined with recent strength in the Japanese Yen, has driven the NZDJPY cross to lows of 76.60. The pair is now approaching trend line support at 76.30 and further weakness can be expected on a break below. Downside supports are at 76.0 and then 75.60. However, should the trend line support hold, a reversal will find resistance at 77.30 and a break above could see a test of 78.15.
The New Zealand Dollar has been strengthening on improving inflation expectations, as reported in a recent Reserve Bank of New Zealand (RBNZ) survey. Earlier this week, a government-commissioned report on the economic impact of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) estimated the economy would grow between 0.3 percent and 1 percent, with exporters having better access to new markets such as Japan, Canada and Mexico. However, the major market moving event on the horizon is retail sales data due on Thursday. The estimate is for quarterly retail sales to come in at 1.4% and the core retail sales are expected to come in at 0.7%. NZDUSD In the daily timeframe, NZDUSD has found major resistance at 0.7400. The 0.7400-0.7500 zone has prevented the pair from upside progress for 2 years. NZDUSD appears to have double topped, as recent U.S. Dollar strength helps to drive the pair lower. Near-term support is at 0.7305 and a break of this level could lead to further declines to support at 0.7280 and then 0.7255. To the upside, a break of 0.7350 would target resistance at 0.7400. GBPNZD GBPNZD is seen to be challenging the August trend line and 38.2% Fibonacci retracement at 1.8930. A confirmed break in the daily timeframe could lead to further declines, with support at 1.8800 and 1.8710, before targeting the 50% Fibonacci and 200MA at 1.8600. However, any reversal would need to break resistance at 1.9080 to make progress towards 0.9140.
The New Zealand Dollar has continued to strengthen after the Reserve Bank of New Zealand’s (RBNZ) latest survey of inflation expectations was released on Wednesday. The survey revealed a steady climb in the number of businesses expecting inflation to rise over the coming years. The RBNZ will only raise interest rates after inflation has made a sustainable return to the higher end of its 1% to 3% target band. The unemployment rate is also expected to fall progressively in the years ahead, suggesting a change in RBNZ’s monetary policy is likely. NZDUSD The continued decline in the U.S. Dollar has helped the Kiwi climb for five straight days to highs at 0.7436. In the daily timeframe, a break of 0.7436 would challenge resistance at 0.7547 before making progress towards June highs in the 0.7520-50 zone. However, any reversal will find initial support at 0.7400 followed by 0.7350. AUDNZD The AUDNZD pair has broken a possible head and shoulders pattern with a measured target, which coincides with the June lows at 1.038. The breakdown was confirmed at the 1.085 neckline before the pair continued the decline to support at the 61.8% Fibonacci retracement level of 1.0724. Continued bearish momentum will find major support at 1.064, followed by 1.055. Only a reversal and move above the neckline at 1.085 would negate the bearish view, with initial resistance at 1.089.
Сессия среды началась с публикации слабых данных по ВВП Японии (предварительная оценка за четвертый квартал) и сильных данных по инфляционным ожиданиям в Новой Зеландии. Японский отчет хоть и оказался хуже прогнозов, но его компоненты были достаточно обнадеживающими, так как был отмечен рост частного потребления, капитальных расходов и экспорта. Что касается новозеландских данных, то они оказались однозначно лучше ожиданий, указав на рост инфляционных ожиданий. Эта информация может заставить Резервный банк Новой Зеландии (РБНЗ) внести коррективы в свои планы. На прошлой неделе регулятор ожидаемо не стал вносить каких-либо изменений в параметры своей денежно-кредитной политики, но тон его сопроводительного заявления и комментариев его представителей оказался более «мягким», чем ожидалось. Рост инфляционных ожиданий может сместить фокус внимания регулятора на ценовую стабильность, тогда как сейчас, кажется, в РБНЗ большего значения придают курсу национальной валюты, отмечая, что текущая его динамика является вполне «комфортной», но если он начнет расти, то центробанк может изменить свою риторику. И японские, и новозеландские данные повлекли за собой рост курсов национальных валют, что также было связано и с продолжающимся ослаблением доллара. Причиной слабости американской валюты по-прежнему остаются опасения инвесторов относительно грядущего увеличения госдолга США. Вернуть силу доллару может усиление ожиданий относительно ужесточения денежно-кредитной политики ФРС более быстрыми темпами, чем ожидалось ранее, на что в регуляторе уже намекали. Так, последнее сопроводительное заявление федрезерва оказалось несколько более жестким, чем предыдущее. В частности, из документа убрали упоминание об ожиданиях сохранения инфляции в ближайшее время ниже целевого уровня в 2%, добавив при этом заявление о том, что «текущие ожидания гарантируют дальнейшее постепенное повышение целевого уровня ставки по федеральным фондам». EUR/USD: в ходе азиатской сессии пара выросла к $1.2390. Пара EUR/USD уже третий день растет и корректируется в рамках общего нисходящего тренда от 1 февраля. Более того, сегодня евро преодолел уровень 50% Fibo и закрепился выше уровня MA 200 H1. По этой причине образовался восходящий канал от $1.2205 в рамках которого и стоит вести свою торговлю. GBP/USD: в ходе азиатской сессии пара торговалась в диапазоне $1.3880-20. Пара GBP/USD продолжает вчерашнюю консолидацию, но все еще находится под полным контролем медведей. Пара торгуется около уровня Fibo 23.6 и тестирует сопротивление наклонного нисходящего канала. Однако, есть вероятность более сильного подъема к $1.3960-85 (максимум 9 февраля, MA 200 H1 и 38.2 Fibo). USD/JPY: в ходе торгов азиатской сессии пара упала к Y106.85. После вчерашнего обвала пара продолжила спад. Важным сопротивлением для пары выступает сопротивление наклонного нисходящего канала и скользящая средняя MA 200 H1, расположенная чуть выше. За последние несколько дней пара существенно и стремительно просела торгуясь сейчас у нижней границы канала. Более того, 14-ти дневный индекс относительной силы (RSI (14) на D1), находится ниже уровня 30, что сигнализирует о возможной смене направления движения цены и ее перепроданности. Сегодня будут опубликованы данные по индексу потребительских цен и розничным продажам в США (13:30 GMT), которые, скорее всего, подтвердят ожидания ФРС, оказав тем самым очень сильное влияние на дальнейшие перспективы американской валюты. Кроме американских данных по индексу потребительских цен и розничным продажам значимыми событиями сегодняшней сессии будет выход отчета по ВВП еврозоны (10:00 GMT) и запасам сырой нефти в США (15:30 GMT). Богдан Терзи, аналитик TeleTradeИсточник: FxTeam
The New Zealand Dollar fell to a four-week low against the greenback after the Reserve Bank of New Zealand (RBNZ) kept rates on hold as expected and signalled no increases until next year. The official cash rate was left unchanged at 1.75% for the 15th month in a row. RBNZ cut its GDP forecast for New Zealand in 2018 from 3.8% to 3.1% after reviewing the fiscal stimulus expected from the new Labour-led government. Inflation forecasts were also lowered, suggesting easy monetary policy was here to stay. Pricing in interest rate derivatives markets on Thursday indicated that interest rates are not expected to rise before May 2019. In the monthly timeframe, NZDUSD was seen to stall at the long-term resistance zone near 0.7450 and is now trading below the 200MA once again. The pair is likely to continue trading within the wedge formation with a possible move to the lower trend line in the coming weeks. In the 4-hourly timeframe, NZDUSD broke the uptrend channel and found support at the 23.6% Fibonacci level of 0.7280 for a number of days. Having broken that level, the 38.2% Fibonacci at 0.71845 was quickly attained. A break of this level will find further downside support at 0.7140 and 0.7100. Any bounce to the 0.72330 horizontal resistance and 200MA will likely find selling pressure, however, a break could lead to a move to resistance at 0.7280.
Новозеландский доллар упал после того как Резервный банк Новой Зеландии, в ходе заседания, принял решение сохранить процентную ставку на уровне 1,75% и проанализировал, что денежно-кредитная политика еще долго будет оставаться мягкой. В сопроводительном заявлении РБНЗ говориться, рост ВВП будет ускоряться на фоне низких процентных ставок. Центробанк также отметил: "Прогнозы по инфляции будут повышаться, а долгосрочные ожидания относительно годовой инфляции закрепились на уровне в 2%". Также на динамику новозеландской валюты повлияли последующие высказывания помощника губернатора РБНЗ Макдермотта, который заявил, новозеландский доллар будет снижаться, так как Федеральный резерв повысит ставки. Он также отметил, что РБНЗ имеет нейтральный взгляд на процентные ставки, а падение инфляции может привести к снижению курса. Макдермотт также заявил, что базовая инфляция по-прежнему нуждается в небольшом толчке, чтобы достичь средней точке целевого диапазона РБНЗ 1-3% Иена снижается, почти достигнув минимума вчерашней сессии против доллара. Сегодня стало известно, что декабре в Япония зафиксирован профиците счета текущих операций в размере Y0,797,2 трил говорится в сообщении министерства финансов в четверг. Однако основная цифра была ниже ожидаемого профицита в размере Y1,018 трил и предыдущего значения Y1, 347 трил. Торговый баланс Японии показал положительное сальдо в размере Y538,9 млрд превысив ожидания в Y520,4 млрд и увеличившись с Y181,0 млрд в предыдущем месяце.тЭкспорт вырос на 8,8% в годовом исчислении до Y7,271 трлн, а импорт подскочил на 14,6% до Y6,732 трлн. Также в четверг Банк Японии заявил, что общее банковское кредитование в Японии в январе выросло на 2,4%, составив Y523,068 трлн. Это следует за 2,5-процентным увеличением в декабре. Также сегодня член правления Банка Японии Хитоси Судзуки оптимистично высказался о перспективах инфляции. "Складываются условия, необходимые для дальнейшего ускорения темпа роста цен", благодаря сильному рынку труда, а также усилиям правительства, направленным на повышение зарплат, и росту производительности, сказал он. Вместе с тем Судзуки отметил, что пройдет некоторое время, прежде чем компании смогут перенести растущие затраты на оплату труда и сырье на цены своих товаров и услуг. Австралийский доллар слабо отреагировал на данные по росту импорта и экспорта Китая. Как стало известно, экспорт Китая в долларовом выражении экспорт в январе вырос на 11,1% в годовом исчислении после роста на 10,9% в декабре. Экономисты ожидали что рост экспорта сократится до 9,6%. В свою очередь импорт Китая подскочил на 36,9% в январе в годовом исчислении по сравнению с декабрем, когда рост составил 4,5%, что значительно выше ожидаемого роста на 9,8%. Таким образом сальдо торгового баланса Китая в долларовом выражении в январе составило $20,34 млрд, что ниже по сравнению с ожидаемым профицитом в размере $54,1 млрд, после зафиксированных $54,69 млрд в декабре Информационно-аналитический отдел TeleTrade Источник: FxTeam
Сегодня вечером в 20:00 GMT станут известны результаты первого в этом году заседания Резервного банка Новой Зеландии (РБНЗ) и, как широко ожидается, центробанк сохранит процентную ставку без изменений на уровне 1,75%. Рынок оценивает вероятность такого исхода заседания в 99,88%. Однако, особое внимание стоит уделить сопроводительному заявлению центробанка и пресс-конференции главы РБНЗ (21:00 GMT) в надежде получить сигналы, касательно будущего денежно-кредитной политики. В своем сопроводительном заявлении политики центробанка, вероятно, обратят внимание на уровень инфляции, который недавно снизился и в настоящее время составляет 1,6%, что ниже целевого диапазона РБНЗ 2-3%. Еще один момент, на который следует обратить внимание, - это недавнее укрепление новозеландского доллара. Со времени последнего заседания РБНЗ прошло почти три месяца, и за это время новозеландская валюта укрепилась почти на 5,5% относительно доллара США. Ранее многие представители центробанка высказывали опасения по поводу укрепления национальной валюты, так как это негативно для внешней торговли. Что касается экономических данных, то они были не очень хорошими: рост розничных продаж замедлился, активность в производственном секторе ослабла, настроения предпринимателей ухудшились, а инфляция замедлилась. Хотя стоит отметить, что рынок труда значительно улучшился, а в декабре неожиданно был зафиксирован профицит торгового баланса из-за сильного экспорта. Судя по экономическим данным, а также тот факт, что в марте центральный банк возглавит новый председатель Эдриан Орр (сейчас временно исполняет обязанности главы РБНЗ Грант Спенсер), заявление центробанка, вероятно, будет нейтральным. Информационно-аналитический отдел TeleTrade Источник: FxTeam
In the traditional post-payrolls data lull, traders will pay attention to central bank meetings out of the UK, Australia and New Zealand, the US non-mfg ISM and the swearing in of new Fed chair Jay Powell both on Monday, as well as ongoing Brexit negotiations. Key Weekly Events courtesy of RanSquawk Monday: Brexit Negotiations Round Begins Tuesday: RBA Monetary Policy Decision, UK Services PMI (Jan) Wednesday: New Zealand Labour Market Report (Q4) Thursday: BoE Monetary Policy Decision & QIR, RBNZ Monetary Policy Decision, Chinese Trade Balance (Jan) Friday: Canadian Labour Market Report (Jan), RBA Statement on Monetary Policy As BofA notes, there are three central bank meetings on the calendar this week. The BoE meets on Thursday, with no change expected in terms of communication. The BOE's Quarterly Inflation Report is expected to sign up to the market curve with three more hikes in three years, upgraded from November's guidance of two in three. Look out for the RBA rates meeting on Tuesday and quarterly statement on monetary policy on Friday. BofA economists expect the RBA to remain on hold with no major changes to forecasts. Given 4Q CPI data, the RBA can be patient before moving policy to more normal settings. The communications will be examined for any signal around the timing of rate hikes. Recent data suggests the RBA could be moving towards a more hawkish stance. Lastly, the RBNZ holds a rates meeting and forecast update this week. Policy is expected to remain unchanged, with recent misses on inflation risks pulling down near-term forecasts. This is the last forecast update before Orr takes over the Governorship. * * * A breaking of key events by region: North America There are no tier one releases due from the US during the week. Across the border in Canada focus will fall on January’s labour market report due on Friday. Consensus looks for headline jobs growth to slow to 1K from December’s 78.6K, while the unemployment rate is expected to tick up to 6.0% from the 5.7% seen in January. Alongside its latest monetary policy decision (where it hiked as expected) the Bank of Canada noted that “labour force participation and hours worked are showing promising signs. Recent data shows that labour market slack is being absorbed more quickly than anticipated. Wages have picked up but are rising by less than would be typical in the absence of labour market slack.” On the wage front RBC notes that “wage growth has picked up but remains a bit low relative to the unemployment rate at 2.9% Y/Y for permanent workers. In any case, the BoC’s recently introduced wage-common measure discounted the LFS wage growth figure in favour of less timely values from productivity, national accounts, and establishment employment data.” Other releases of note: Monday: US Services & Composite PMIs (Jan, F), ISM Non-Manufacturing PMI (Jan) Tuesday: US Trade Balance (Dec), Canadian Trade Balance (Dec), US JOLTs Job Openings (Dec), Canadian Ivey PMI (Jan) Europe There are no tier one releases due from the region during the week. Other releases of note: Monday: Eurozone Services & Composite PMIs (Jan, F), Eurozone Retail Sales (Dec) Wednesday: German Industrial Production (Dec) UK Early focus will fall on Brexit negotiations, with EU chief negotiator Barnier due to visit UK Brexit Minister Davis in London as the next round of talks get underway on Monday. The first Bank of England (BoE) monetary policy decision of 2018 will conclude on Thursday, with consensus looking for the BoE to stand pat, with a 9-0 vote. The noted risk to consensus is that either/both hawks within the MPC (Saunders and McCafferty) cast a dissenting vote in favour of another hike. The decision will be accompanied by the latest Quarterly Inflation Report (QIR). Since the BoE last convened, official statistics revealed that the UK economy expanded by 0.5% Q/Q in Q4 (against the BoE’s forecast of 0.4% in November). On the inflation front, CPI has peaked (for now), oil prices have risen by circa 13% and the GBP has moved higher on a trade weighted basis. Citi suggests that “new BoE forecasts may reflect somewhat stronger growth and higher inflation rates, although the Bank will likely remain cautious due to Brexit uncertainty” (November’s QIR can be found here). Citi also posits that “the MPC’s supply assessment could lead to higher slack estimates, which would be dovish. But also lower potential growth. That would set a lower speed limit and thus be hawkish.” BoE rhetoric since the last meeting has towed the line, in that it is consistent with the view portrayed in November’s QIR. Governor Carney has noted that wages are picking up, but conceded that they are not growing spectacularly, he also reiterated that he expects investment in the UK to pick up in 2019. The Governor has also suggested that inflation pass through due to the exchange rate shock has further to go, and that he expects inflation to remain above 2% in the near future. Carney also stressed that any unwind of QE will be well telegraphed when the time comes. Elsewhere BoE hawk Saunders noted that it is likely that interest rates will need to rise further over time, but any further tightening will be limited and gradual. Saunders also noted that Brexit could push BoE policy in either direction and reiterated that he expects the labour market to continue to tighten. Finally, BoE newcomer Tenreyro stated that, at the December meeting, she saw ‘ample time’ before the BoE would need to raise rates again. Asia-Pacific Early focus in China will fall on Monday’s Caixin Services PMI. As ever, there are no expectations; the prior release stood at 53.9, while the latest official survey came in at 55.0. In December, survey collators Caixin noted that “the expansion in new business picked up for the second consecutive month. Prices charged increased at a slightly slower rate in December, while input prices rose at the joint-fastest pace since February 2013.” The other release of note in China will come on Thursday in the form of the trade balance, with consensus looking for USD 54.00bln from USD 54.69bln last time out. In Australia focus will fall on Tuesday’s Reserve Bank of Australia (RBA) monetary policy decision. Consensus looks for the RBA to stand pat, with only one of the 48 surveyed by Reuters looking for a 25bps hike. The recent Q4 inflation headline was slightly softer than expected, however, the RBA’s preferred trimmed mean metric held steady at 1.8% Y/Y, as it remained below the bottom end of the RBA’s 2-3% band. The Reserve Bank of New Zealand (RBNZ) will convene and issue its first monetary decision of 2018 on Thursday, with all of those surveyed expecting the central bank to stand pat. Most believe that interim Governor Grant Spencer will act as a placeholder, before Adrian Orr assumes the role in March. As a result, consensus looks for the Reserve Bank to maintain its balanced assessment and to emphasise that interest rates are likely to remain low for a considerable period of time. * * * Courtesy of Deutsche, here is a summary of key daily events in the coming week: Monday: The start of the week will see the remaining January services and composite PMIs released in Europe and the US. Also due in the US is the January ISM non-manufacturing while in Europe the February Sentix investor confidence reading and December retail sales data for the Euro area will be due. Of most interest however will likely be ECB President Draghi's comments in front of the European Parliament. Tuesday: A fairly quiet day all round with December factory orders data in Germany the only release of note in Europe, while in the US the December trade balance and JOLTS job openings data is scheduled to be released. Away from that it'll be worth keeping an eye on Fed Bullard's comments when he speaks in the afternoon on the US Economy and Monetary Policy, while the ECB's Weidmann speaks in the morning. General Motors and Walt Disney are due to report earnings. Wednesday: The data calendar continues to remain fairly sparse with December industrial production in Germany, December trade data in France and December consumer credit data in the US the only releases of note. China should also release January foreign reserves data at some stage. However there is plenty of central bank speak due with the ECB's Nouy and Lautenschlaeger speaking in Frankfurt in the morning, while the Fed's Kaplan, Dudley, Evans and Williams are all due to speak throughout the day. Thursday: The BoE should be the highlight on Thursday with the MPC meeting due around midday. The latest inflation report will be released alongside and Governor Carney will then follow with his press conference. Away from that the most signficant data due out is most likely to be the January trade numbers in China, while December trade data in Germany and the latest weekly initial jobless claims data in the US are also due. The Fed's Kashkari and Harker are also slated to speak in the afternoon at separate events, while the ECB's Mersch, Praet and Villeory will speak. AIGand CVS Health are due to report earnings. Friday: We finish the week with more important data out of China with the January CPI and PPI prints due out in the early morning. In Europe we'll get December industrial production data out of the UK and France, with trade numbers also due in the former, while across the pond in the US the only data of note is December wholesale trade sales. The Fed's George is also due to speak in the early morning. Finally, focusing just on the US, here is a chart summary of the key events this week from BofA: And a detailed breakdown with consensus estimates from Goldman: The key economic release next week is the ISM non-manufacturing survey on Monday. Federal Reserve Chairman Powell will be sworn into office Monday morning, and there are a few scheduled speaking engagements by other Fed officials this week. Monday, February 5 09:00 AM Federal Reserve Chairman Powell sworn in: Federal Reserve Board Governor Jerome Powell will be sworn in as Chairman of the Board of Governors at approximately 9 a.m. Monday in a private ceremony. 09:45 AM Markit US Services PMI (consensus 53.3, last 53.3) 10:00 AM ISM non-manufacturing index, January (GS 57.0, consensus 56.5, last 55.9): We expect the ISM non-manufacturing index rose 1.1pt in January. Regional non-manufacturing surveys were mixed in January, with moderate gains in the Dallas and New York Fed surveys while the Philadelphia and Richmond surveys deteriorated but remained in positive territory. Overall, our non-manufacturing tracker edged up 0.2pt in January to 57.2. 02:00 PM Senior Loan Officer Opinion Survey, 2018Q1: The Fed will release results and a memo from its quarterly Senior Loan Officer Opinion Survey on bank lending practices. The 2017Q4 release showed little change in bank lending practices over the previous quarter, with a modest share of banks easing lending standards for commercial and industrial loans and commercial real estate loans. Since the last survey, US bank loan growth slowed with commercial and industrial loans growing at their slowest year-over-year pace since 2011. Tuesday, February 6 08:30 AM Trade balance, December (GS -$52.2bn, consensus -$52.0bn, last -$50.5bn): we expect the trade balance to widen by $1.7bn to -$52.2bn in December. The Advance Economic Indicators report last week showed a widening trade deficit in goods, and we expect a rebound in services imports in December. 08:50 AM St. Louis Fed President Bullard (FOMC non-voter) speaks: St. Louis Fed President James Bullard will give a presentation on monetary policy and the US economic outlook at a conference in Lexington, Kentucky. Audience Q&A is expected. 10:00 AM JOLTS job openings, December (last 5,879k) Wednesday, February 7 08:30 AM New York Fed President Dudley (FOMC voter) speaks: New York Fed President William Dudley will speak on a panel at an event titled “Banking Culture: Still Room for Improvement” in New York. 03:00 PM Consumer credit, December (consensus +$19.7bn, last +$28.0bn) 05:20 PM San Francisco Fed President Williams (FOMC voter) speaks: San Francisco Fed President John Williams will give remarks at a luncheon in Honolulu. Audience Q&A is expected. Thursday, February 8 04:50 AM Dallas Fed President Kaplan (FOMC non-voter) speaks: Dallas Fed President Robert Kaplan will participate in a Q&A session in Frankfurt. Audience and media Q&A is expected. 08:30 AM Initial jobless claims, week ended February 3 (GS 230, consensus 232k, last 230k): Continuing jobless claims, week ended January 27 (consensus 1,933k, last 1,953k): We estimate initial jobless claims remained flat in the week ended February 3, as the trend appears to have declined as weekly readings remained low, even after the seasonally volatile start-of-year period. Continuing claims – the number of persons receiving benefits through standard programs – rose in the previous week, and claims in Missouri appear slightly elevated. 09:00 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed President Neel Kashkari will participate in a Q&A discussion in Pierre, South Dakota. Audience Q&A is expected. 09:00 PM Kansas City Fed President George (FOMC non-voter) speaks: Kansas City Fed President Esther George will speak on the economic outlook at an event in Wichita, Kansas. Audience Q&A is expected. Friday, February 9 10:00 AM Wholesale inventories, December final (consensus +0.2%, last +0.2%) Source: Deutsche, BofA, Goldma, Ransquawk
Немного итогов предыдущей пятидневки. За прошедшую неделю индекс МосБиржи упал с 2295,26 п. до 2281,84 п., а РТС снизился с 1286,70 п. до 1272,76 п. Евро укрепился за неделю с $1,2424 до $1,2454. Пара USD/RUB поднялась за неделю с 56,28 до 56,55, а EUR/RUB выросла с 69,79 до 70,45. Нефть Brent подешевела за неделю с $70,52 до $68,58. Американский индекс широкого рынка S&P 500 упал с 2872,87 п. до 2762,13 п.
Доллар преодолел трехлетний минимум против своих сверстников в четверг после того, как обрушился на комментарии министра финансов США Стивена Мнучина о том что он приветствует слабую валюту, в то время как евро ожидает решение Европейского центрального банка. Доллар упал после того, как Мнучин заявил в среду на Всемирном экономическом форуме в Давосе, что «очевидно, что слабый доллар хорош для нас, поскольку он связан с торговлей и возможностями». Его комментарии были замечены рынками как отход от традиционной валютной политики США. Отметим, что секретари Казначейства США повторяют, что сильный доллар находится в национальных интересах с конца 1990-х годов, когда Роберт Рубин занимал эту должность в администрации Клинтона. Доллар уже был под давлением из-за проблем торгового протекционизма, раздутого решением президента США Дональда Трампа навязать на этой неделе более высокие импортные тарифы на стиральные машины и солнечные батареи. Евро также растет против доллара, однако рост ограничивается осторожностью инвесторов перед заседанием ЕЦБ, которое состоится в четверг. Аналитики считают, что ЕЦБ не станет менять параметры денежно-кредитной политики, и предпочтет дождаться мартовской встречи, чтобы внести изменения в будущее руководство. Протокол декабрьского заседания ЕЦБ сигнализировал о возможности пересмотра руководством коммуникационной позиции в "начале" 2018 года и, в частности, намерения продолжить свою программу QE. Но в статье Reuters, основанной на трех источниках, близких к этому вопросу, сообщалось, что какое-либо изменения в руководстве, вероятно, произойдут позднее, чем на встрече 25 января. Около 90% из 70 респондентов, ответивших на дополнительный вопрос в опросе Reuters, сказали, что ЕЦБ полностью завершит программу покупки облигаций к концу 2018 года. Новозеландский доллар резко упал после публикации данных по инфляции за четвертый квартал 2017 года. Индекс потребительских цен в Новой Зеландии в четвертом квартале 2017 года вырос на 0,1%, однако рост был значительно ниже предыдущего значения 0,5% и прогноза экономистов 0,4%, - сообщили в Бюро статистики Новой Зеландии. Ежегодные потребительские цены выросли на 1,6%, что также ниже прогноза и по сравнению с аналогичным периодом предыдущего года 1,9% «Цены на бензин выросли в декабре, после двух кварталов падения», - сказал старший менеджер Бюро статистики Джон Этвелл. - «Рост цен на нефть и падающий обменный курс резко повысили цены в период с июля по ноябрь этого года». Резервный банк Новой Зеландии прогнозировал рост цен на 0,3% в четвертом квартале, и теперь он вряд ли отойдет от нейтральной позиции в отношении ставок в ближайшем будущем. Инфляция все еще остается ниже середины целевого диапазона 1%-3%, установленного РБНЗ. Ранее Центральный банк просигнализировал, что не планирует повышать ставки до второй половины 2019 года. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Индекс потребительских цен в Новой Зеландии в четвертом квартале 2017 года выросли на 0,1%, однако рост был значительно ниже предыдущего значения 0,5% и прогноза экономистов 0,4%, - сообщили в Бюро статистики Новой Зеландии. Подробнее в отчете отмечено, что транспортные цены выросли на 3,2%, чему способствовали более высокие цены на бензин (на 6,1%) и международные авиабилеты (на 11%). Цены жилищно-коммунальных предприятий выросли на 0,6%, что вызвано 1,3-процентным ростом строительства. В свою очередь цены на продовольствие упали на -1,7%, а цены на овощи снизились на -19%. Цены упали на целый ряд розничных товаров, включая новые автомобили, одежду и бытовую технику. «Цены на бензин выросли в декабре, после двух кварталов падения», - сказал старший менеджер Бюро статистики Джон Этвелл. - «Рост цен на нефть и падающий обменный курс резко повысили цены в период с июля по ноябрь этого года. Ежегодные потребительские цены выросли на 1,6%, что также ниже прогноза и по сравнению с аналогичным периодом предыдущего года 1,9% Резервный банк Новой Зеландии прогнозировал рост цен на 0,3% в четвертом квартале, и теперь он вряд ли отойдет от нейтральной позиции в отношении ставок в ближайшем будущем. Инфляция все еще остается ниже середины целевого диапазона 1%-3%, установленного РБНЗ. Ранее Центральный банк просигнализировал, что не планирует повышать ставки до второй половины 2019 года. Новозеландский доллар резко снизился после выхода данных по инфляции за четвертый квартал. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
The Zacks Analyst Blog Highlights: Winklevoss Bitcoin, Reality Shares, Shares PHLX and VanEck Vectors
The Zacks Analyst Blog Highlights: Winklevoss Bitcoin, Reality Shares, Shares PHLX and VanEck Vectors
Sweden’s Riksbank, the world’s oldest central bank, is exploring the possibility of a digital register-based e-krona; the Reserve Bank of New Zealand is researching whether its physical currency could be replaced by a digital alternative; the Bank of England is trialling blockchain-like systems; the Monetary Authority of Singapore is examining the use of distributed ledger technology for clearing and settlement of payments; and the PBoC said in October that it had completed tests on algorithms for a prototype of its own digital currency. Now the Reserve Bank of Australia (RBA) has entered the fray with an all too familiar refrain. We’re paraphrasing…Bitcoin is bad, the realm of criminals and little more than a speculative mania, but the technology underlying Bitcoin has great potential, which we can exploit in time with our own “superior” digital currency. This is what Philip Lowe, the RBA’s Governor, actually said about Bitcoin at the Australian Payment Summit, which took place today at the Hyatt Sydney Regency in Sydney Harbour. When thought of purely as a payment instrument, (Bitcoin) seems more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions. So the current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment. No surprise there, just more of the same from banking Mafiosi like Lowe, the ECB’s Constancio (“tulip”) and most notably, JPM’s Dimon. The Financial Times article outlining the RBA’s thinking sets out the case for blockchain/distributed ledger technology. Central banks, commercial banks and other financial institutions are exploring how to use private distributed ledgers to make financial transactions cheaper, more transparent, and less vulnerable to fraud. Banks and settlement systems currently use central electronic ledgers to track money transfers. But these systems can be slow, often rely on manual input and are open to hacking. Distributed ledger records transactions through a network of computers rather than a single central party…The attractions of the technology include the ability to make fast digital money transfers that do not carry the cost of handling cash, tracked securely by the network. But…there’s just one thing missing, which is where we “need” our central banking friends. However, a potential drawback of bitcoin-style systems is the lack of a central entity standing behind the liability, Mr Lowe said. Philip Lowe’s and his RBA colleagues are examining the potential for an eAUD, which would be issued alongside physical banknotes - although the FT article neglects to add the word “initially” (if you’ll excuse our cynicism). Australia’s central bank is exploring creating electronic banknotes using the technology underpinning bitcoin, as major central banks around the world race to bring cash into the digital age. Philip Lowe, governor of the Reserve Bank of Australia, said in a speech on Wednesday that the bank was analysing the benefits and drawbacks of issuing an electronic form of the Australian dollar — the “eAUD” — alongside traditional banknotes. Speaking at the Australian Payment Summit, Mr Lowe said: “It is possible that the RBA might, in time, issue a new form of digital money…perhaps using distributed ledger technology.” He added that although the RBA has “no immediate plans” to issue digital dollars, the central bank is “continuing to look at the pros and cons”. The central bank also is exploring a new digital dollar settlement system based on the use of distributed ledger technology, or blockchain, the technology behind bitcoin. Digital dollars could take the form of a “token” that is issued and stored in consumers’ digital wallets, which can then be used for payments in a similar way to physical bank notes. Perhaps in a classic case of “problem, reaction, solution”, we’re speculating of course, the RBA will introduce an eAUD and phase out physical currency during the next financial crisis. In the case of Australia we may not have too long to wait as we discussed last month in “The Party’s Over For Australia’s $5.6 Trillion Housing Frenzy”. However, we noted the best analogy for the “Down Under” economy in “Why Australia’s Economy Is A House Of Cards” in which Matt Barrie and Craig Tindale argued that the three decades long expansion was mostly the result of “dumb-luck”. As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble. Browsing through the speaker biographies at the Australian Payment Summit, besides being RBA Governor, Philip Lowe is also (we can’t help but smile) a member of Australia’s Financial Stability Board and “spent two years at the Bank for International Settlements working on financial stability issues”. On a serious note, we know the direction which central banks want to lead us, as we argued a week ago with regard to the nomination of Marvin Goodfriend as Fed governor. It’s clear from reading between the lines that although central bankers are not engaging in a public discussion, the architects of the boom-bust cycles are considering their policy options for the next crisis…the one where their latest credit/asset bubble bursts in horrendous fashion. It’s also clear that the preferred solution is negative interest rates and either abolishing paper currency or taxing it in line with a depreciating digital currency standard. The RBA’s Philip Lowe is another minion seeking to control the narrative for the banking Mafiosi.
Доллар держится около двухнедельных максимумах против корзины основных валют во вторник, так как инвесторы ожидают результатов встречи федеральной резервной системе США на этой неделе для новых катализаторов. Ожидается, что ФРС повысит процентные ставки на своем двухдневном совещании по вопросам политики, которое завершится в среду, и ожидается, что в следующем году она продолжит ужесточать политику. Большинство экономистов, опрошенных Reuters, теперь ожидают еще три повышения ставок в следующем году по сравнению с двумя, по результатам опроса всего несколько недель назад, хотя перспективы остаются омраченными упрямой подавленной инфляцией. Поскольку повышение курса на этой неделе было оценено, доллар может провисать сначала после объявления политики ФРС, сказал Стивен Дули, валютный стратег для Western Union Business Solutions в Мельбурне. Однако ФРС, вероятно, будет оптимистично настроен по поводу экономических перспектив и, вероятно, поможет подкрепить доллар, добавил он. Новозеландский доллар установил новый двухнедельный максимум, поскольку инвесторы приветствовали назначение начальника Национального пенсионного фонда Адриана Орра, бывшего сотрудника центрального банка, возглавить Резервный банк Новой Зеландии с марта 2018 года. Новозеландский доллар, который поднялся почти на 1,1% в понедельник, увеличил свой доход во вторник до самого высокого показателя с 28 ноября. Биткойн подешевел на 1,4% и составил около $16 247 на базе Люксембургской биржи Bitstamp, установив рекордный максимум в $17 270 на бирже в понедельник. Недавно запущенные фьючерсы на биткойны на биржах в Чикаго Cboe Global Markets предположили, что трейдеры ожидают, что рост цен на криптовалюту замедлится в ближайшие месяцы, даже когда он взорвался выше $17 000 долларов в понедельник до рекордного максимума. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Заместитель главы РБНЗ, Грант Спенсер: Резервный банк Новой Зеландии становится более гибким в таргетинге по инфляции
Хронически низкая инфляция побудила руководство РБНЗ задуматься о том, нужно ли им менять денежно-кредитную политику и свой подход к ней Возможно, настало время, когда монетарная политика страны должна коррелировать по занятости и финансовой стабильности государства, а не на инфляцию Нужно ли при этом использовать процентные ставки? Если смотреть глобально, имеет смысл делать что-то, что сдерживало бы пузыри раздутых активов. Однако, это скорее проблема для высших эшелонов власти, а не для руководства ЦБ Тем не менее, мне очень хотелось бы увидеть будущее, где центральные банки контролируют инфляцию. При этом я не знаю периода в истории, когда банковские регуляторы затрачивали на это столько усилий, как последние десять лет РБНЗ следует проявлять осторожность в отношении вынесения каких-либо рекомендаций относительно изменения существующей системы Мы в ЦБ считаем, что слабая глобальная инфляция будет сохраняться, но она не угрожает экономическому росту Информационно-аналитический отдел TeleTradeИсточник: FxTeam
The overnight fireworks in Japan, which saw the Nikkei plunge by 860 intraday points and sent vol and volumes soaring (before recovering most losses), spooked traders in Asia and around the globe, and U.S. equity futures are red this morning, along with European shares and oil. As one early riser sellside desk notes, the Nikkei 225 provided the latest example of choppy markets and the 860 point intraday plunge "got us worried. Is this a warning sign for risk assets?" President Trump's challenge of China for "unfair trading practices" (which he blamed on his predecessors) did not help the calm mood. “The stock market has run out of a little momentum since the blow-out on the (Japanese) topix so it feels like it’s temporarily paused,” said Societe Generale strategist Kit Juckes. “We are waiting for some news from the Republicans on the tax plans, there is a bond market that has stalled and we’ve got rather soggy looking emerging markets... We probably need to get U.S. Treasury yields higher to get things going again.” In the aftermath of the Japanese vol spike, the MSCI Asia Pacific Index turned briefly negative having earlier climbed to all-time record. Most of Europe’s main bourses also drifted in and out of the red after Japan's disturbance spooked traders and after mixed earnings and as Brexit talks resumed with low expectations in Brussels. There were a series of ECB speeches and what should be buoyant new growth forecasts due later from the European Commission, though bond markets were mostly quiet following a rally this week in benchmark U.S. Treasuries and Bunds. In fact, German Bunds were sharply offered, with yields rising 9% on the day an approaching 0.36%: the move has dragged the rest of the European bonds lower, with OATs and Gilts also moving. According to some desks, this may be due to some rotation from the European equity markets, which are broadly trading into the red today and could be following in the footsteps of Nikkei. Already shaken by events in Japan, basic-resources shares weighed on the Stoxx Europe 600 index following a decline in industrial-metals prices. An increase in growth expectations from the European Commission failed to lift stocks as disappointing results from companies including Siemens AG and Vestas Wind Systems A/S added to the malaise. Banks gained, led by Italian lenders after BPER Banca S.p.A. earnings beat estimates. Stocks in Asia earlier rose above their 2007 peak before an intraday reversal in Japanese shares on technically-driven trading pared gains in the region. Sterling edged lower as Brexit talks resumed, while oil halted a two-day drop. Understandably, the yen was the dominant theme of the overnight session as investors rushed to buy the Japanese currency following the Nikkei plunge; the euro found support after the European Commission raised its growth outlook for the common area, while the pound reversed earlier gains as some hedge funds turned sellers; Investor attention has been focused on Asia this week, where Trump has embarked on an 11-day tour. In Beijing Thursday, he said China is taking advantage of American workers and companies with unfair trade practices, but he blamed his predecessors in the White House rather than China for allowing the massive U.S. trade deficit to grow. A year after Trump was elected to president, investors are also reflecting on how financial markets have fared in the interim, and a rally that has outperformed all but 4 "new president" markets in US history. As Bloomberg adds, elsewhere in the overnight session, the New Zealand dollar held onto Wednesday’s gains after the central bank flagged it may raise interest rates earlier than expected. The Kiwi was the day's big mover, surging about 1 percent to a two-week high of before dipping to trade at $0.6956. The kiwi soared after the Reserve Bank of New Zealand (RBNZ) said the country’s fiscal stimulus and the currency’s recent fall would lead to faster inflation and likely an earlier rise in interest rates. Treasury yields were range-bound as markets wait to see the U.S. tax proposal that will serve as the basis for further discussions. The kiwi was near two-week high after more hawkish RBNZ sends New Zealand’s 10-year yield eight basis points higher. Aussie dips briefly following surprise drop in housing finance activity and a subseqent short squeeze sent it to session highs; Australian sovereign bonds drift lower with 10-year yield up three basis points at 2.60%. JGB futures dip after mediocre 30-year auction tails 1.1bps. The dollar index against a basket of six major currencies was 0.1 percent lower at 94.803 meanwhile, as it drifted further from the three-month high of 95.150 set in late October. A U.S. Senate tax-cut bill, differing from one already in the House of Representatives, was expected to be unveiled on Thursday, complicating a Republican tax overhaul push and increasing scepticism on Wall Street about the effort. Some also focused on fallout from Democrat wins in regional U.S. elections this week as signal for next year’s mid-term Congressional elections for U.S. President Donald Trump. “There’s very much a risk of disappointment. The U.S. dollar could go through a weakening phase on the back of uncertainty around that tax reform,” said Steven Dooley, currency strategist for Western Union Business Solutions in Melbourne. Meanwhile, stalled Brexit talks resume on Thursday in Brussels with no indication that a breakthrough is in reach. In commodity markets, Brent and U.S. crude oil futures were modestly lower, having hit two-year highs earlier in the week following a 40% surge since July. U.S. data showing a rise in domestic crude production had weighed on sentiment overnight but the Middle East uncertainty in Saudi Arabia limited the losses. Gold added 0.2 percent to $1,283.45 an ounce after rising to a three-week high of $1,287.13 an ounce the previous day. Palladium hovered near a 16-year high of $1,019 while nickel fell by more than 2 percent in London to its weakest since October as hype over potential electric vehicle demand that has been driving it higher eased. The nickel market had been ignoring downside risks from policy developments in supply markets Indonesia and the Philippines, and instead focusing on potential future demand from electric vehicle batteries, said Morgan Stanley in a report. “We (have) heard little to alter our view that producing NiSO (nickel sulphate) isn’t particularly challenging/costly and we see near-term downside risk to price,” it said. On today's calendar, the ECB said economic growth in the U.K. is headed for a prolonged slowdown even as the euro-area economy is forecast to expand at the fastest pace in a decade this year. And in the U.S., tax reform discussions continue. The Senate is due to release a “conceptual mark” of a proposal Thursday, according to a spokeswoman. Expected economic data include jobless claims and wholesale inventories. Dish, Disney, Johnson Controls and TransCanada are among companies reporting earnings. Bulletin Headline Summary from RanSquawk European markets remain subdued, as equities trade mixed with a lack of any real direction GBP weaker amid a late follow-through of concerning Brexit commentary Looking ahead, highlights include US weekly jobs, ECB’s Lautenschlaeger and Constancio Market Snapshot S&P 500 futures down 0.1% to 2,588.30 STOXX Europe 600 down 0.2% to 393.82 MSCI Asia up 0.1% to 171.99 MSCI Asia ex Japan up 0.3% to 561.79 Nikkei down 0.2% to 22,868.71 Topix down 0.3% to 1,813.11 Hang Seng Index up 0.8% to 29,136.57 Shanghai Composite up 0.4% to 3,427.80 Sensex up 0.06% to 33,239.47 Australia S&P/ASX 200 up 0.6% to 6,049.43 Kospi down 0.07% to 2,550.57 German 10Y yield rose 0.2 bps to 0.328% Euro up 0.05% to $1.1601 Italian 10Y yield rose 4.5 bps to 1.482% Spanish 10Y yield rose 3.0 bps to 1.515% Brent futures down 0.1% to $63.41/bbl Gold spot up 0.2% to $1,283.82 U.S. Dollar Index down 0.06% to 94.81 Top Overnight News President Trump said China is taking advantage of American workers and American companies with unfair trade practices, but blamed his predecessors in the White House for allowing the U.S. trade deficit to grow The European Commission’s chief Brexit negotiator, Michel Barnier, and U.K. Brexit Secretary David Davis resume talks on the terms of Britain’s exit from the EU. Timing and duration in Brussels to be determined ECB’s head of banking supervision, Daniele Nouy, signaled that she’s willing to compromise on controversial plans to toughen rules on bad loans after criticism from the European Parliament that sent Italian bank shares soaring EU is giving U.K. an informal deadline of two to three weeks to set out how much it is prepared to pay in the Brexit divorce settlement, the Financial Times reports, citing an unidentified senior EU negotiator Hearing on Powell for Fed Chair set for Nov. 28 Saudi Billionaires Said to Move Funds to Escape Asset Freeze AT&T CEO Says He Won’t Sell CNN as Antitrust Tension Rises Boeing Wins China Orders for 300 Planes Worth $37 Billion London House-Price Slump Persists as Brokers See Sales Tumble Vestas Plunges Most in 6 Years on Tougher Wind Competition BOE’s McCafferty Says Banks May Leave Before Brexit Deal Agreed Risk on sentiment had been in full swing in Asia as stocks continued to edge higher at the beginning of the session, before later paring initial advances, particularly in Japanese assets. Nikkei 225 had been the notable outperformer although reversed gains of 2% as US equity futures dipped, subsequently sparking safe haven flow in the JPY, while some investors also touted profit taking. Elsewhere, the ASX 200 hovered around 10yr highs with iron ore prices seeing another day of gains, consequently supporting miners. Chinese markets traded in mixed fashion with the Hang Seng keeping afloat after encouraging Chinese CPI and PPI data which tops analyst estimates, while the Shanghai Comp fluctuated between gains and losses. 10yr JGBs are a tad lower, while underperformance has been observed in the belly of the curve with the 10yr yield ticking up 0.1bps. Top Asia News Noble Group Posts $3 Billion Year-to-Date Loss as Crisis Deepens Inside Noble-Vitol Deal Shows Colonial Pipeline as Top Asset Malaysia Says It May Consider Review of Monetary Accommodation Malaysian Bonds Face Specter of First Rate Hike Since 2014 Philippines Holds Benchmark Rate as Inflation Seen on Target Bakrieland Says Singapore Court Approves Debt Restructuring Plan European equities trade with little in the way of any notable price action after a directionless lead from Asia after initial gains were erased. On a sector specific basis, performance has largely been off the back of individual earnings from across the continent with notable movers including Vestas Wind Systems (-16.9%), Burberry (-10.5%), Sainsbury’s (-2.9%), Siemens (-2.6%) and Commerzbank (+2.6%). Upside in Commerzbank shares has subsequently lead to some outperformance in financial names with Italian banks also providing some support amid UniCredit’s latest trading update and a sector bounceback from yesterday’s losses. No sign of any investor angst or dampened demand whatsoever, as 2023 supply was snapped up with only a 1 tick price tail. This, despite a sharp retreat in yields following the BoE rate hike and not much in the way of concession going in to the DMO tap. Note also, the issue does not fall into the more normal 5 year bucket until next year and the average auction yield was just a shade below yesterday’s closing level. However, 10 year benchmark Liffe futures have retreated from best levels to marginal new lows for the session (125.45), albeit largely alongside a general downturn in fixed (Bunds just off a new Eurex base of 163.23). In truth, debt markets are lacking clear direction and consolidating recent gains/yield declines/curve flattening. Top European News Denmark’s Negative Rates Are Seen Persisting Into Next Decade ECB’s Nouy Bends on Bad-Loan Plan as Italian Bank Shares Soar U.K. Likely to See More Utility Mergers If SSE Deal Approved Euro-Area Growth Forecast Lifted Again as U.K. Outlook Dims In FX, a broadly softer Greenback, largely due to ongoing US tax reform uncertainty, and supportive RBNZ impulses has enabled the Kiwi to recoup more lost ground after the RBNZ stood pat on rates at 1.75%. Accordingly, it brought forward rate hike projections to June 2019 from Q3 previously, while Governor Spencer also contended that the NZD is now fair value (although his deputy McDermott thinks a bit more depreciation is desirable). EUR is back to pivoting around the 1.1600 level vs the Dollar where large (1.7 bn) option expiries reside. USD/JPY has seen very choppy trade in line with the Nikkei, but ultimately firmer on safe-haven grounds, as USD/JJPY retreats from 114.00 again towards November lows. Currently around 113.50, bids are seen at 113.40 and then 113.00, while offers are said to be layered from 114.00-20. Riksbank meeting minutes see several members emphasising the importance of the exchange rate for the economic outlook and inflation prospects. In commodities, iron ore prices continued to surge higher overnight with Dalian iron ore rising as much as 2% amid the persistent rise in steel prices. Precious metals gained a slight bid following the turnaround in risk sentiment, where Japan equities reversed its 2% rise to trade with losses of 1.5%. WTI and Brent crude futures trade relatively sideways with little in the way of notable newsflow other than Goldman Sachs sticking to their USD 58bbl year-end call for Brent whilst noting the ‘potential for high spot price volatility in the coming weeks’. Looking at today's calendar, data wise, September Germany trade data along with UK industrial production are due. Elsewhere, US initial jobless claims and wholesale inventories are also due. We’ll also receive the latest EC economic forecasts while the ECB’s Villeroy de Galhau, Coerue, Mersch, Lautenschlaeger and Constancio are due to speak. Brexit talks are due to resume between Barnier and Davis while President Trump holds meetings with China’s Xi and Li Keqiang. US event calendar 7:45am: Bloomberg Nov. United States Economic Survey 8:30am: Initial Jobless Claims, est. 231,500, prior 229,000; Continuing Claims, est. 1.89m, prior 1.88m 9:45am: Bloomberg Consumer Comfort, prior 51.7 10am: Wholesale Trade Sales MoM, est. 0.9%, prior 1.7%; Wholesale Inventories MoM, est. 0.3%, prior 0.3% DB's Jim Reid concludes the overnight wrap Needless to say that the focus for markets today will be on what details emerge from the Senate’s version of the GOP tax bill. It’s unclear just how much detail we’ll get though with some conflicting reports out there. Axios reported that the release of the bill will be delayed however Politico reported separately that GOP leaders are ready to walk through the bill with the GOP conference at 11.30 EST. Thereafter it will be released to the public but the timing is a bit up in the air so we might have to wait and see. Overnight, a spokeswoman for the Senate Finance Committee, Ms Lawless, noted that today’s tax proposal will be a “conceptual mark” rather than the legislative details. Over in markets, the one year Trump anniversary was one of the less exciting days that we’ve had so far. Initially the tone felt a bit more risk-off with European markets generally closing a bit softer. US markets did however pare early losses into the close at least with the S&P 500 ending +0.14%. That masked another difficult day for banks however, partly influenced by the Washington Post article that did the rounds suggesting that the Senate GOP tax bill could delay the cut in the corporate tax rate by one year. Later in the day, Treasury Secretary Steven Mnuchin also refused to rule out a possible phase-in of corporate tax cuts. Meanwhile victory for the Democrats in the two Governor races in New Jersey and especially Virginia also appeared to play a factor given the midterm elections next year. It remains to be seen whether that will transpire into taking back votes across the rest of the country but nevertheless it was a statement of intent. Meanwhile EM tensions continue to bubble under the surface with headlines never too far from the front pages. EM sovereign debt has certainty had a tough time of it in the last week or so but we’re also starting to see some signs of selling pressure in DM HY credit with Crossover and CDX HY 11bps and 7bps wider this week, respectively. All the talk in bond markets at the moment though is the flattening across the Treasury curve. Yesterday saw both the 2s10s and 5s30s curves flatten for the 9th and 10th successive day respectively. The former dropped to 68bps and has now flattened by 16bps during that run. The latter was only modestly flatter at 78bps but is still also 12bps flatter over the same time. So as we know the Treasury curve is the flattest it’s been in 10 years and there is plenty of ongoing debate as to what is driving the recent price action. Various reasons have been suggested. Our US rates strategists have previously noted that even with a tax plan, overseas investors and pension buying of the long-end is depressing term premium and yields. Another suggestion is that with 2y yields somewhat anchored relative to the Fed’s effective rate and therefore further rate hikes, the long-end is instead being weighed down by long-end Euro rates. Unsurprisingly there is plenty of discussion about how the recent moves are indicating late cycle tendencies. One thing we would note though is that the NY Fed recession model is only showing a 9% probability of a recession in the next 12 months. While that’s up from 3% at the end of last year the overall level is still clearly fairly low based on their model but it’s worth keeping an eye on. Also worth monitoring perhaps is the whether the flattening has had much impact on bank lending when we receive the next Fed Senior Loan Survey. In the last 3 days, US banks have dropped -3.53%, so the sector has certainly materially underperformed. This morning in Asia, China’s October CPI was slightly above consensus at +1.9% yoy (vs. +1.8% expected) and also up from +1.6% the month prior, while PPI was steady but well above expectations at +6.9% yoy (vs. +6.6% expected). Markets are trading higher in Asia, with the Nikkei powering ahead (+0.58%) to a fresh 25 year high following sound corporate results, while the Hang Seng (+0.52%) and ASX 200 (+0.55%) are also up, but the Kospi is down 0.33%. Last night Bloomberg ran an article suggesting that the White House plans to announce $250bn of business deals with China this week based on comments from Commerce Secretary Wilbur Ross. As we go to print President Trump and China President Xi Jingping are about to hold a joint briefing. This comes after Trump called the trade relationship between the two “very one sided” and the deficit “shockingly high”. Xi said that China is to become more open to foreign investment and that the nation is “unswervingly committed” to opening up. Moving on. In the UK, PM May’s cabinet has now lost two ministers within one week after the International Development Secretary Priti Patel offered her resignation, shortly after she admitted to holding a series of unauthorised meetings with Israeli officials without the PM’s knowledge and suggested giving British aid money to an Israeli army project. In view of the increased instability around PM May’s government, some suggested this may have knock on impacts on the progress of Brexit talks. Nonetheless, the Irish PM Varadkar has signalled that Brexit talks could have a breakthrough by December, noting that “I’m more optimistic than I was in the weeks before the October Summit”. The current round of Brexit talks will resume today in Brussels. Following on, BoE policy maker McCafferty has warned that clarity on Brexit will be needed by early next year to better allow businesses to forward plan. He noted businesses “cannot wait until the last minute”, adding that “there’s a point…even when it becomes clear what the final deal will be – whether it’s no deal or some sort of deal – the banks will have to act”. Elsewhere, the BoE’s banking regulator Mr Woods had earlier noted that it was “plausible” the UK could lose up to 75,000 jobs in the banking and insurance sector if it left the EU bloc without a trade deal. Staying in the UK, according to a network of UK businesses monitored by the BoE, the latest agents’ summary suggest wage growth in 2018 should improve further, now likely to be 2.5%-3.5% yoy growth (up 0.5% from prior readings), in part due to a slow-down in the availability of workers, which in some ways is not too surprising given UK’s unemployment is at a 42 year low. However, while the survey noted modest growth in spending is expected to continue for the coming year, expectations in the following two years were “weaker”. Across the pond, the Fed’s Harker noted he has “not at this point” seen anything that would push him away from a rate hike in December, which is in line with the consensus view with the odds of rate hike unchanged at 92% (per Bloomberg). Looking ahead, he has “pencilled in three (rate) increases in 2018” but noted that this is somewhat evolving as he “will reassess that as the data comes in”. On potential tax cuts, he noted “we need more specificity as to what those programs would entail”, and that “we have not put any fiscal stimulus” in our forecasts at this stage. Before we look at the day ahead, a quick recap of the minimal economic data from yesterday. In the US, the weekly MBA mortgage applications was flat (vs. -2.6% previous). Over in Europe, Spain’s September industrial production was above expectations at +0.1% mom (vs. -0.2% expected), leading to annual growth of +3.4% yoy (vs. +3.1% expected). In France, the September trade deficit was broadly in line at -$4.67bln, although there was a $0.3bn positive revision to the prior month’s reading. Elsewhere, the current account balance was lower than expected at -$3.1bn (vs. -$1.5bn expected). This morning in New Zealand, the central bank has the left cash rate on hold at 1.75% and noted that “monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly”. Elsewhere, inflation is now expected to trough at 1.5% yoy in 1Q18 but rebound to 2.1% yoy in 2Q. Looking at the day ahead, data wise, September Germany trade data along with UK industrial production are due. Elsewhere, US initial jobless claims and wholesale inventories are also due. We’ll also receive the latest EC economic forecasts while the ECB’s Villeroy de Galhau, Coerue, Mersch, Lautenschlaeger and Constancio are due to speak. Brexit talks are due to resume between Barnier and Davis while President Trump holds meetings with China’s Xi and Li Keqiang.