Morning Call Script - 15 Sept 2023

Overnight asset drivers + the impending data calendar

@HarksterHQ is happy to announce the evolution of its content offering. Of course, The Morning Hark will continue to arrive in your inbox around 8am London, and we would like to take this opportunity to thank the +16k loyal subscribers for their support. Going forward, we will also be adding Harkster's Morning Call Script. This will focus on the overnight asset drivers and the impending data calendar. It will be particularly useful for those presenting on morning calls on the sell and buy side. Publication Time: 6:45am.

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What's Moved:

• Chinese data top the billed overnight: 

  • Industrial Production +4.5% vs exp +3.9% (prev +3.7%), Retail Sales +4.6% vs exp +3% (prev +2.5%). This unexpected strength has squeezed the bearish China complex and propelled USDCNH sub 7.26 and all of the correlated pairs stronger ... AUDUSD +50bps to 0.6465, NZDUSD +40bps 0.5930, etc etc. Is this data the first sign that China's small incremental initiatives will be enough to stimulate the economy and stabilise financial markets? One data set doesn't make a trend, but something to watch into year end…

  • A further 25bps RRR cut to banks reserve requirement ratio has also propelled $70bln back into the Chinese economy that had been draining due to recent bond issuance

  • Elsewhere, their fight continues against Yuan deprecation trend (Bloomberg: China Urges Brokers To Cut FX Trading In Support For Weak Yuan)

  • Asian equities have traded well as a result of the positive economic data and tailwinds flooding through the equity space from the well-received ARM IPO (FT: Arm listing stirs Wall street bankers hopes of IPO fee revival). HSI +1.7%, Topix +1.2% and Kospi +1.3%.  

• ECB is done ... hawks got one more hike, doves got the one liner to exemplify a significant pause... the bar to another hike is now very high as the consumption/business/growth leading indicators deteriorate despite inflation remaining a problem. (although ECB hawks have already released a playbook for a Dec hike FT)

• .....which leaves EUR-XXX lower, EURAUD, EURCAD etc stronger China complex, PBoC RRR cut, higher oil, single currency as a funder / interest rates diverge post dovish ECB, strong US data keeping one global growth engine alive and of course the ARM IPO being a positive bellwether for the appetite for privately held assets ... 

• A Podcast for the commute... Bank of America: Welcoming inflation back to Japan

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The Day Ahead:

• EUR (07:45): French Final Inflation Rate

• EUR (09:00): Italian Final Inflation Rate

• EUR (10:00): Labour Cost Index YoY

• EUR (10:45): ECB Lagarde

• USD (13:30): NY Empire State Manufacturing  

• USD (14:15): Industrial Production

• USD (15:00): Michigan Consumer Sentiment Prel

• USD (15:00): Michigan Inflation Expectations Prel

• USD (15:00): Michigan Current Conditions Prel 

• USD (15:00): Michigan 5 Year Inflation Expectations Prel

• Quad Witching in the US .... 

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