Morning Call Script - 14 Dec 2023

Overnight asset drivers & the impending data calendar

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What’s Moved Overnight

• No more hikes, 75bps of easing, policy "well into restrictive territory", "very focused on not making the mistake of keeping rates too high for too long", they will need to cut well before 2% target is reached = DXY opens London session at a 4month low as goldilocks arrives, Fed has hit the soft landing of below par growth, falling inflation and cuts are now on the table.

  • FX - EUR 1.0900, AUD 0.6725, JPY 141.50, CNH 7.1400

  • FI - 85% chance of a March cut, 2s @ 4.36% and 10s @ 3.97% (10y below 4% for the first time since August)

  • Bloomberg - Powell Pivots on Rates Toward a Happy New Year - Bloomberg

• CCY wars - will Lagarde agree? The most painful trade will be EURUSD hitting 1.10 not 1.07 as the mkt has been focused on the diverging growth, inflation and fiscal dynamics on opposite sides of the Atlantic. If the US needs 75bps, Europe will need more and sooner. To recover some premium, the market needs Lagarde to match if not beat JPow's dovishness.

  • Reuters - Is dovishness infectious?

• Overnight data - AUD employment was strong 61.5k vs exp 11k, and it was full time jobs that drove the difference 57k vs exp 17k. Consumer inflation exp also softened to 4.5% from prior 4.9%. 

[Paid Subscribers] For greater detail on the overnight news stories as well as a focus on the day ahead, see The Morning Hark in your inbox around 7.15GMT (2.15 EST) whilst also watch out for Read on the Trading Floor around 17.30GMT (12.30EST), which captures the macro themes trending on Harkster.com over the past 24hrs.

Have a great day, and keep smiling!

Podcast for the Commute

• JPM Market Matters - Data Assets & Alpha Group: Demystifying AI in the Financial Domain (Part 1)

The Day Ahead

• CHF (08:30): SNB

• NOK (09:00): Norges

• GBP (12:00): BoE

• EUR (13:15): ECB

• USD (13:30): Retail Sales

• EUR (13:45): ECB Press Conf

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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