Morning Call Script - 30 Nov 2023
Overnight asset drivers & the impending data calendar
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What’s Moved Overnight
China Manufacturing PMI at 49.4 was softer than the expected 49.7. The index fell deeper into contractionary territory. Asia stocks traded mixed but it had little to no impact on the USD which remains at its lows - CNH 7.1325, JPY 147.00, EUR 1.0975, AUD 0.6650 and GBP 1.2700
Similar to FX, Fixed Income has settled overnight with US2s 4.66% (down ~ 30bps on the week), 5s 4.235% and 10s 4.29%.
If maintained into the close, the 60bps rally in US10s will be one of its best months since 2008.
Waller's comments have induced a full 25bps cut for May and we're now 50/50 for March. "should inflation keep falling for a few months, then policy would need to be loosened just to stop real rates from rising"
Natural bounce to commodities to end the month - XAU $2040 and Brent $83.00
Mester (known hawk) is happy for another pause at the Dec meeting and the Beige book indicated consumer activity/appetite is slowing...
The risks for today are the market will be short USD expecting the well advertised month end to come, so the 14:00 - 16:00 window may see a sudden USD bounce as those that need USD also waited until the end to buy them. Furthermore, PCE today, Waller again and Powell tomorrow... Will there be any pushback on market pricing? or crucially will Powell endorse Williams comments on real rates, falling inflation and thus looser policy by next summer.
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
The Day Ahead
EUR (07:45): French Inflation Rate
EUR (10:00): Eurozone Inflation Rate
EUR (10:00): Italian Inflation Rate
CAD (13:30): GDP
USD (13:30): PCE
USD (13:30): Initial Claims
USD (14:45): Chicago PMI
USD (15:00): Pending Home Sales
ECB Speak: Lagarde (13;30), Enria (13:45), McCaul (14:15) and Jochnick (15:45)
Fed Speak: Williams (14:05)
BoE Speak: Greene (16:00)
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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