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Morning Call Script - 26 Sept 2023
Overnight asset drivers & the impending data calendar
Yields: 4.55% 10yr US and long-term yields continue to test wides not seen since Oct 2007. Fed's Goolsbee, a dove joined team "higher for longer" yesterday but he did also say a soft landing was possible.
FX: higher yields = stronger USD especially against G3 + China.
USDJPY touching 149.00 and market is clearly on intervention watch above 150.00, as the pace of JPY weakness slows. Nobody wants to be the person to pay the high before they potentially come in, but the trend is not yet set to reverse until we see further yield support for JPY and/or US data sink
GBP$ at 1.2200 as Sunak looks to try and kill HS2 .... (even Tom Brady's friends are calling him out FT)
A stagnant German IFO print did little to help the single currency, EUR$ opening the London session sub-1.0600.
$CNH back above 7.30 and still being managed / losses being minimised.
Limited data today, but tomorrow brings with it some potential US Corp t+2 demand for USD.
China: it wouldn't be an APAC session without focus on Evergrande and the embattled property sector. Reuters reporting Developer China Oceanwide Holdings "added to investor concerns in an exchange filing which said that a Bermuda court had ordered its winding up and appointed joint provisional liquidators"
Equities: the higher yield environment, tighter financial conditions globally as well as a fresh focus on property woes are being blamed for the underperformance again of equities overnight... APAC stocks led by HSI down 1.82% and CSI 300 down 65bp.
Debt Ceiling: Bloomberg reporting a short-term bipartisan funding deal maybe found but the legislation would present a challenge for House Speaker McCarthy.
US labour force: Biden is due in Michigan today to visit striking workers at the same time Ford have announced construction on a planned Michigan EV battery plant has stopped
A podcast for the commute... Real Vision featuring Andreas Steno Larsen and Maggie Lake... Energy Crisis Part ii?, surging prices and renewed challenges in the energy sector mean that bonds and stocks "have to do the dirty work"
Have a great day and keep smiling
EUR (08:00): ECB Lane
USD (15:00): CB Consumer Confidence
USD (15:00): Building Permits and New Home Sales
USD (15:00): Richmond Fed Manufacturing Index
USD (18:00): 2year note auction
USD (18:30): Fed's Bowman
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