The Morning Hark - 11 May 2022
The Morning Hark - 11 May 2022
Today’s focus……..US CPI and a mass of ECB speakers with Lagarde the highlight at 9.00 BST
Daily roundup - all prices are at 7.40 BST with changes reflecting movement from midnight BST
Oil - Both Brent and WTI futures up nearly 3 percent on the day at 105.20 and 102.41 respectively. After weakness yesterday from the fear of lowered Chinese demand and faltering western economies today’s bounce may be just a retracement from the $12 losses this week and come on the back of Chinese officials in Shanghai announcing there is “basically no community spread” of covid.
Natural Gas is higher again today after Ukraine suspended gas flow from Russia to Western Europe (which transits through Ukraine pipelines). European Gas has jumped 6.8% so far.
EQ – Stock markets having a day of respite so far with rallies across the board. Asian indices are mostly higher with Hang Seng up 1.6% at 19,920 and the Nikkei up smalls 0.2% at 26,215 while the KOSPI is flat The US futures are also up smalls.
Gold - Gold is lower, at 1841 as we write. After claiming it held up well yesterday, we have been made to eat our words as it printed new 3 month lows this morning at 1830.6
It lost $16 yesterday after Fed speakers continued with the 50BP a meeting chatter and pointed to incoming data before they could write off 75bp.
FI – A more peaceful day in fixed income yesterday and today has maintained that. 10-year yield sits just below 3% at 2.97
We await US CPI today, which following on from Fed speakers yesterday will play a big part in the 50 or 75bp debate. US 10yr chopped around yesterday and there is very little reason to see any move of importance pre the number today.
FX – FX has gone quiet, spot is wallowing around, with 1.0600 currently holding back EUR bulls. CPI will be everything today and even the loose fwds market has tightened up over the last two days. USDJPY sits in low 130’s, and GBP is happy on the 1.23 big figure. USDCNH has had a couple of looks this week up towards 6.8000, notable that every other round number has blown through but 6.8000 is holding for now. Is the PBOC up there? We might find out today at 1.30BST
Others – Those Asian candles in Bitcoin are holding it up without making inroads on the sellers. Bitcoin is currently up a meagre 0.95% at 31,245
The market is still digesting the news of the UST/Terra peg breaking and what this means for other stable coins.
Support for BTC is at 29,000 but with the tech fans in digital space being mostly retail and the TradFi side of the coin seeing the levels as targets we are all suddenly calculating MSTR’s breakeven levels and wondering how that plays out.
US CPI, is the focus today as noted with a 0.5% drop estimated since last time out. The YoY number excluding “stuff you actually need” is expected at 6%, down from 6.5% and wouldn’t the FED love some respite in the numbers.
ECB have an event today in Slovenia with 9 speakers over the day including most importantly Lagarde at 9.00BST.
This should give them a chance to forward guide. I lean towards a view that the EUR is basing a little below 1.0500 and currently the highs at 1.0585-1.0600 are capping us. With the right ECB message and CPI number we could fly with 1.0700 a tasty looking target.
Good luck.
📅⠀The main highlights for the day ahead in terms of data and speakers:
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US CPI 13.30 BST
MOM consensus 0.2% versus 1.2% previously
Ex food and energy 0.4% versus 0.3% previously
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ECB speakers
Elderson 7.00 BST
Nagel 8.15BST
Lagarde 9.00 BST
Vasle 9.00 BST
Makhlouf 9.30BST
Knot 9.50 BST
Vasle, Centeno, Buch, Muller 12.30 BST
Schnabel 13.20BST
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Fed speakers
Bostic 17.00 BST
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📚⠀Articles discovered on Harkster exploring some of the current key macro themes in more depth:
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Terra
Coindesk - What Is LUNA and UST? A Guide to the Terra Ecosystem
The Block - Binance suspends LUNA and UST withdrawals amid market turbulence
ZeroHedge - Did The Biggest Recent Buyer Of Bitcoin Just Become A Forced-Seller?
🔥⠀Top 5 trending links on Harkster yesterday:
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Stuck in the Middle (Mr Blonde) - Ripe for Relief
Prometheus Research - The Observatory
Christophe Barraud - Top 5 Charts: Demand Destruction Started, U.S. Retail Gasoline Price Hits Record High
Mish Talk - Total Household Debt Hits a New Record High Led by Mortgages
Commodity Context - Shale Struggles
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