Morning Call Script - 04 Jan 2024

Overnight asset drivers & the impending data calendar

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What’s Moved Overnight

• Fed minutes - QT closer than previously thought? Board members indicated it was time to discuss what would trigger the end of QT.

  • Reuters - Fed minutes cite lower inflation risks, concern about 'overly restrictive' policy

  • Bloomberg - Markets See Fed’s Exit From Quantitative Tightening Nearing

  • WSJ - Fed Minutes Suggest Rate Hikes Are Over, but Offer No Timetable on Cuts

• Crude 73.30 and Brent 78.80 - push another 80bps higher as supply constraints and risk of Houthis Red Sea attacks continues to support the complex

• Chinese stocks have not rebound to start the year. CSI 300 dropped a further 1.2% after fitch downgraded four mainland bad-debt managers. This ignored the better-than-expected Caixin Services PMI of 52.9 vs exp 51.6. 

  • FT - China steps up aid for regional banks as economic risks mount

  • Fitch - Downgrades Four Chinese National AMCs by One Notch

• Japan's return from NY holiday saw Nikkei catch down to global stocks as well as react to the quake. 

• FX - cross-JPY higher led by USDJPY (143.70) which has continued its squeeze to start 2024. The earthquake makes it harder for BoJ to end negative rates (Bloomberg). Elsewhere USD softened post "QT discussion", EUR 1.0932, AUD 0.6745, NZD 0.6270 and GBP 1.675. 

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Have a great day, and keep smiling!

Podcast for the Commute

• Oaktree Capital - The Insight: Conversations – Walking into the Unknown with Howard Marks, David Rosenberg, and Aman Kumar

The Day Ahead

• EUR (08:50): French Final Dec Services PMI and Composite PMI

• EUR (08:55): German Final Dec Services PMI and Composite PMI

• EUR (09:00): Eurozone Final Dec Services PMI and Composite PMI

• EUR (09:00): Regional German CPI e.g. Bavaria

• GBP (09:30): Mortgage Approvals

• GBP (09:30): Final Dec Services PMI 

• EUR (13:00): German CPI

• USD (13:15): ADP and Initial Claims

• CAD (14:30): Final Dec Services PMI and Composite PMI

• USD (14:45): Final Dec Services PMI and Composite PMI

Stay informed throughout the day with our new commentary channel (‘Intraday Market Colour’) highlighting key notes, topics du jour, and HarksterHQ’s market updates around key data points and headlines. 

Available on the HarksterPRO Research Platform.

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The information provided in this post is for general information purposes only. No information, materials, services, and other content provided in this post constitute solicitation, recommendation, endorsement or any financial, investment, or other advice. Seek independent professional consultation in the form of legal, financial, and fiscal advice before making any investment decision.