The Morning Hark - 21 Apr 2022
Today’s focus ……Little in way of data but Powell and Lagarde speak at IMF conference at 18.00 BST. BOE’s Mann and Bailey talk at 14.00 BST and 17.30 BST respectively. Eurozone CPI (final) at 10.00 BST
Daily roundup - all prices are at 7.50 BST with changes reflecting movement from midnight BST
Oil - Both Brent and WTI futures higher today at 108.37 and 103.45 respectively after barely moving yesterday.
The EIA inventory numbers yesterday showed a drawdown in crude inventories. This is countered by continual thoughts of a Chinese slowdown as some factories renter lockdowns just 24 hours after reopening.
EQ - Asian indices mixed with Nikkei up and Hang Seng down. Nikkei sits around 1% up at 27.550 and Hang Seng down nearer 2% at 20,550 while the Kospi is up smalls.
The US indices are up tiny overnight still holding our noted supports at 4,400 for the S&P and 14,000 for the Nasdaq.
Gold - Gold small down again on the day at 1954.
FI – US 10y yield currently sitting at 2.86 following a pullback yesterday. JGB yields are stable after BOJ announced yesterday that they would continue to do unlimited buying for next 5 days.
FX – In the majors, USDJPY is still the story and after the new high and subsequent sell off yesterday it has recovered somewhat today. EUR is the big mover on the day so far, rallying in early London after more ECB rate hike chatter to sit at 1.0900
NZD is the worst performer after it suffered from its CPI miss last night. The expected 7.1% inflation print missed by 0.2 to come in at 6.9%.
Coming back to the JPY MOF’s Suzuki spoke today reiterating the view that “sudden moves aren’t desirable”, “disorderly moves can have a negative effect”, but also “rates are decided by the market”.
Kuroda echoed the Japanese IMF representative when he said the rates must reflect the fundamentals.
None of this is going to change the interest rate playbook or the USDJPY rally in our opinion. As proven yesterday what will matter is a pullback in US yields coming handily yesterday morning after we had made a new high at 129.43
USDCNH as we noted has continued its breakout to the topside. Around 350 pips today and 10 big figures in the last 3 days. Expectations of more accommodation will continue to drive this move.
Others - Bitcoin at 41,600 is continuing to follow the Nasdaq for its direction firmly in the tech risk on risk off universe.
The VIX/MOVE widening continued again today with the VIX down 5% and MOVE up 2%
📅⠀The main highlights for the day in terms of data and speakers:
IMF conference – Powell and Lagarde speak today at 18.00 BST on an IMF panel discussing the global economy.
📚⠀Articles discovered on Harkster exploring some of the current key macro themes in more depth:
German and Russian gas
ZeroHedge - Explaining Germany's Russian Gas Problem
JGB/YCC = Stablecoin
Jim Bianco - Twitter Thread
🔥⠀Top 5 trending links on Harkster yesterday:
Alhambra Partners - I Told You It *Wasn’t* Money Printing; How The Fed Helped Cause, But Can’t Solve, Our Current ‘Inflation’
Saxo Markets - FX Update: Rising yields continue to pressure JPY, and now CHF?
BNY Mellon - Morning Briefing - April 20 2022
LPL Financial Research - Three Reasons Inflation Could Be Near A Peak
James Picerno - When Will Demand Destruction Overpower Growth?
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