The Morning Hark - 15 Aug 2023

Today’s focus... China cuts, BoJ Intervention Watch, ZEW and US Retail Sales

• Weaker set of Chinese data: Ind Prod YoY 3.7% vs exp 4.3%, Retail Sales YoY 2.5% vs exp 4.0%

• This was accompanied with "surprise" easing by PBoC, 15bps MLF cut to 2.5%, the biggest drop since 2020 (ZeroHedge, FT, ING, WSJ). The 7day repo was also cut 10bps to 1.8%. This will aid debt refunding, but it is not the big bang fiscal policy shift that the mkt is looking for to change the direction of the overall growth story.

• Intervention "watch" as the mkt grinds higher and tests the key zone for MoF/BoJ... 145.00/50. Fundamentals and carry support the USD trend, but given actions by authorities last September in this zone, risk management says to be wary of MoF headlines / verbal intervention or supply of USD. Suzuki already on the wires during ldn traders commute, "Will Take Proper Steps If Seeing Speculative Moves"... Key for USDJPY today will be US retail sales, will they support 10y US yields and hold a break of the Oct high of 4.24/25%?

• AUD an outperformer after PBoC cuts, but domestic data was in line with expectations, wages did not support a re-pricing of Sept and were consistent with the inflation target. AUDCNH one of the biggest movers overnight +60bps. 

• After a choppy start to the week the mkt will be looking towards some key data points to see if we can break from this summer consolidation... #1. ZEW... German Recession?, #2. US Data = still outperforming? 

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1. US 10yr real yield at a 14 year high (BBG), will the retail sales control group add fuel to the yield fire or force a summer mean reversion back into range ... stay nimble and watch for a failed break ... 

2. The US-China decoupling story continues to garner attention in the press... FT: The US now accepts national and economic security cant be separated

3. Equities: AI Bubble, QT and negative seasonals...

   1. Saxo: AI Stocks at risk as reality bites

   2. ZeroHedge: Michael Burry's full 13F ...not just the large index puts that caught the headlines ... 

   3. Concoda: The Stealth Liquidity Squeeze

   4. The Market Mosaic: 3 reasons it's still a bull market

4. USD Exceptionalism? ... ING: FX Talking August - The dollar's still got the groove

5. Crypto resilience in the face of higher US real rates... is it an EM deval story?

   1. Ashmore: Not so Bueno in Buenos Aires

   2. The Economist: Russia will struggle to cope with a sinking rouble

   3. London Crypto Club: Connecting the Dots... BTC outperforming ARS, RUB and TRY by > 100% YTD

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1. kyla’s Newsletter
   : Why Do People Think the Economy is Bad?

2. Bloomberg John Authers: Back From Vacation and What's in My Head

3. RiskReversal Advisors: When China Sneezes... 🎧

4. DB: Don't Chase the Rally 🎧

5. San Francisco Fed: How Far is Labor Force Participation from its Trend?

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Follow the latest market narratives through our curated research & commentary channels on Harkster.

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All times in British Summer Time (BST)

UK (07:00): Employment and Earnings

SW (07:00): Sweden CPIF

EZ (10:00): Zew

US (13:30): Retail Sales 

CA (13:30): CPI

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