Morning Call Script - 22 Sept 2023
Overnight asset drivers & the impending data calendar
BoJ: as the market expected, there was no policy adjustment from the BoJ. Given they did not have any new forecasts and are still watching the impact of their previous YCC widening, it makes sense that they have waited at the very least until their Oct meeting when they get updated staff forecasts (Reuters). As a result, we're in a very similar setup to September 2022, a yield sell off in the US and USDJPY can test 150.00 and we will see if the MOF are there again. Watch to see them work through their DEFCON levels of verbal intervention (Suzuki out already overnight). The market may not have been expecting much but into next year, there is a rising sense BoJ will tighten again (Bloomberg, Reuters Poll)
FX: GBP (1.2285), CHF (0.9045) and JPY (148.00) softer overnight after the surprise dovishness of their respective CB's.
A long running story over the past few years but finally it looks like JPM Bond Index will add India... (Bloomberg: Why India’s Planned Inclusion in JPMorgan Bond Index Will Have ‘Profound Impact’)
Last year global CB's united with the view that inflation was 'transitory', this year the core message is "higher for longer"... Reuters: Global Central Banks unite in 'higher for longer' credo
Equities: this is not the first time we've seen an intra month high around the OPEX expiry, but equities remain weak as the market eyes some technical reversals in key bellwether stocks like APPLE ... This also corresponds with seasonal rise in VIX, the higher for longer real rates move in the US (US 10s touching 4.5% for the first time since 07) and many US corps are now locked out of buybacks ahead of earnings. MSCI World index slide 1.5% overnight after US indices closed at their lowest levels since June. Looking into next year and @HarksterHQ is far from an equity expert, but the ever-rising real rate now offers a consistent alternative to investors whilst companies cashflows will also dwindle, thus the absence of easy credit will mean companies may find it harder to match their buyback programmes year on year.
A podcast for the commute... FT Unhedged: Well, actually: Our 'Dumb Money' movie review
GBP (07:00): Retail Sales
SEK: Riksbank Govenor Thedeen speaks
EUR (08:15): French PMIs
EUR (08:30): German PMIs
EUR (09:00: Eurozone PMIs
GBP (09:30): UK PMI's
CAD (13:30): Retail Sales
USD (14:45): US PMI's
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