Read on the Trading Floor - 27 June 2024
Today’s focus… Debate Night!
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Macro Themes At Play
Theme 1 - Drifting into quarter end summer markets
Theme 2 - Debate night in the US... Biden vs Trump (again!)
Theme 3 - Mon Pol Divergence in G10... SEK, AUD, JPY
What else is being read on Harkster?
Theme 1 - Drifting into quarter end summer markets
Calm waters, as the mkt bobs data-less into quarter end but under the hood, things are churning. Micron down aggressively pre-mkt, quarter end rebalancing and window dressing rolling through the pipes, a lot of ink is once again being spilt on the topic of Yentervention (does the current weakness reflect the underlying macro drivers?), foreigners turned up again for the 5year auction (4 month high) with another good auction now expected in this evenings $44bln 7yr. As the Euro's continue and the traditional summer doldrums approach, it feels like the market is settling in to a period of two months of calm before the Autumn elections and potentially the first Fed move.... See you on Labour Day?
Bloomberg - Micron Drops After Forecast Fails to Meet Lofty Expectations
Adam Mancini - SPX Is Coiled Very Tight. Move Is Incoming Now. June 27 Plan
Steno Research Quant Signals - USDJPY SCEPTICISM
Bloomberg - Yen’s ‘One Sided’ Tumble to 1986 Low Boosts Intervention Risk
ZeroHedge - Solid 5Y Auction Stops Through As Foreign Demand Jumps To 4 Month High
Theme 2 - Debate night in the US... Biden vs Trump (again!)
Given both candidates are well known to the electorate, here are some interesting facts about the debate...
#1. There will be no live TV audience in the studio,
#2. Their mics can be cut off if candidates run over their allotted time or speak out of turn (aimed at stopping interruptions),
#3. The debate is extremely early in the election calendar
#4. It will be the first time a sitting President debates his predecessor
#5. Their combined age will be the oldest (hardly a surprise)
#6. After the Super Bowl, Presidential debates remain one of the most watched TV programs in the US (When will Prime or Netflix "bid" for them?)
#7. A convicted felon has never appeared in the debate before.
Will there be any surprises? Given both candidates have dominated the news over the past decade (at the very least), it seems unlikely we will hear anything groundbreaking. Red or Blue, many have already chosen their candidate so the TV debate will not matter much. However, it's the swing voter, in the close-run states that Biden and Trump will be speaking directly to on Gaza, Israel, Ukraine, Taxes, Abortion, Immigration, China, AI etc
Theme 3 - Mon Pol divergence in G10... SEK, AUD, JPY
Monetary policy in G10 to the fore as the Riksbank deliver a dovish hold, Yentervention watch continues (will they wait for 163,165,170 before they come in again), or the hotter than expected Aussie inflation data driving local rates higher. Could the RBA be forced to hike? Aussie consumer inflation expectations printed 4.4%, up from the prior 4.1% and comes hot on the heels of the monthly 4% inflation print (prior 3.6%).
ING - Australia: May inflation raises the spectre of rate hikes
ING - Sweden’s Riksbank doubles down on future rate cut guidance
Nordea - Riksbank flash-comment: Dovish hold
Reuters - Japan issues fresh warnings against sharp yen falls
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