Read on the Trading Floor - 11 Dec 2023
Today’s focus… Calm before the storm
Macro Themes At Play
Theme 1 - The calm before the storm
It has been a relatively quiet session, as the market sits and waits for Team Higher For Longer to hit the newswires in the coming days.
JPY - did anyone really expect them to go in Dec before seeing the Q1 wage agreements? Once again, a hawkish JPY story only lasted 24/48hours and we're in a similar cycle to the previous BoJ moves when headlines/stories get leaked on both sides of the argument.
Bloomberg - BOJ Is Said to See Little Need to End Minus Rate Next Week
Brent Donnelly - Peak Loose
Oil - FinTwit has gone quiet as Biden refills the SPR on the dip. There were plenty of negative Biden comments on route to $95-100 in September that haven't aged well. He is now getting them back on the bid. Some of the key ME budgets have oil median forecast for $85... so are we entering the bottom of the wider $70-100 range?
oilprice.com - Oil Rebounds as DOE Looks To Buy 3 Million Barrels For SPR In March
The Commodity Report - Dear Oil Bulls - We Told You!
Crypto - its outperformance could only last so long. Following the strong nfp print, sell off in gold, fear of hawkish Powell and calls for $150k price targets, it's only natural to see a wave of tp'ing and a healthy correction ahead of some major events (CPI, Fed etc).
Ecoinometrics - Bitcoin ETFs are just a tool, the real trend is in demographics
Unchained podcast - Bitcoin: Buy or Wait for ETF?
London Crypto Club - Connecting the Dots: Macro on Track
Triple witching - just to add to the CB noise, we've also got to navigate triple witching in thin holiday liquidity.
SpotGamma - December OPEX Live with Brent and Imran
Theme 2 - If everyone expects CB's to pushback on mkt pricing, where is the hawkish surprise going to come from?
FT - Central banks prepare to rebuff investors over path of interest rates
WSJ - Jerome Powell’s Inflation Fight Is Succeeding, Raising Questions About Rate Cuts
Bloomberg - Global Rate-Cut Standoff Looms in 2023 Policy Finale
WSJ - When Bond Yields Dropped, the Everything Rally Kicked Off
Theme 3 - Surely not Boris again....
Never say never in British politics. It's a crucial week for Sunak as he testifies in front of the covid inquiry and of course he's under pressure from back benchers on both sides of the Conservative party as some say the Rwanda plan goes too far and others not enough.
The Guardian - How Tory MPs could derail Sunak’s Rwanda plan
The Hill - Rishi Sunak faces a revolt in the UK Parliament over his Rwanda plan after a grilling on COVID-19
The Telegraph - Tory ‘star chamber’ rejects Sunak’s Rwanda flights plan
Market has turned positive on GBP as "stagflation" rotates to "soft landing" (Bloomberg - Goldman, Funds Turn Bullish on Pound as BOE to Lag on Rate Cuts) but the source of populist politics are as a result of the wealth inequality (fueled by fiscal/mon pol decisions over covid) and decades of lost productivity (Bloomberg - Is Britain Ready to Be Honest About Its Decline? )
Theme 3 - Sports dominate the holiday period
As markets quieten down, sports always dominate the holiday period. As a European, it's hard to comprehend why taxes pay for stadiums but as an MUFC fan, maybe a small sales tax is needed to rebuild Old Trafford and allow fans to buy out the Glaziers.
FT - German football clubs vote to back private equity investment
The Guardian - Premier League: 10 talking points from the weekend’s action
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