Morning Call Script - 20 Oct 2023
Overnight asset drivers & the impending data calendar
What’s Moved Overnight
Overnight data - Japanese inflation 3.0% (exp 3.2%), its lowest level in 1year but it did little to impact JPY which remains just below 150.00. China pumped CNY 733bln short term funding into the system via reverse repurchase contracts. This was after the PBoC left their 1Y Loan Prime Rate unchanged at 3.45% and 5Y at 4.2%.
Powell took Nov off the table but also indicated they could do more under certain circumstances as monetary policy does not feel "too tight." His core message was similar to other members of the board over the past week ... proceed carefully, risk of over and under tightening, term premium doing some of their work for them but another hike is not off the table.
The markets global attention is on US10s, after a 30bps or so sell off week to date to touch 5.00% yesterday. Asia has seen a short term reprieve in pressure as we open the london morning around 4.95% with US2s also lower from 5.21% to 5.15%.
Asian equities a sea of red, tracking Wall Street lower ... NZ 50 closed the week down 2.4%, AU50 down 2% WoW, Nikkei dropped 3% WoW and CSI 300 -4% WoW.
Finally, FX had a dull session in the APAC time zone ... EUR 1.0575, GBP 1.2130, AUD 0.6315.
Have a great day, and keep smiling!
Podcast for the Commute
JPM EM Fixed Income - Rising yields and geopolitical tail-risks
The Day Ahead
GBP (07:00): Retail Sales MoM
CAD (13:30): Retail Sales
USD (14:00): Fed Harker
USD (17:15): Fed Mester
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