The Morning Hark - 29 Aug 2023
Today’s focus...JOLTS, Corp USD flows, searching for a flight back to London
Constructive tone for SPX and APAC stocks, with some Chinese media outlets discussing another potential RRR cut from the PBoC.
UK BRC shop price "deflation"... well at least the trend is our friend, down to 6.9% from previous 7.6% and the lowest level of inflation since Oct 22. (FT)
USDCNY fixed at 7.1851 (vs previous 7.1856 and exp 7.2854)
NZ government plans digital service tax in 2025 (BBG)
Bank holidays have a way of sucking the life out of a market. Even though APAC and the US have manned the desks over the past 24hours, the lack of UK participants as well as the back loaded data week has left most assets treading water and directionless...
The bad news for the day ahead is the travel chaos in London airports yesterday (FT, The New York Times), which may further delay the market returning to full strength. Good luck to any families stranded!
It's an interesting setup for the USD despite the US data heavy week. Corp's normally have some USD to purchase this afternoon so that they're back in the US and settled by month end for tax purposes, whilst rebalancing models for Asset Managers are also indicating USD demand (SEB: Small but rare need to buy USD/SEK)
JPY is back under the microscope following BoJ Ueda's comments at JH... "underlying inflation is still deflationary". GS joined JPM indicating the risks of 150, if not higher, and JPY devaluation is something the Gryning Times has been discussing at length (And The Beat Goes On). The only way this ship turns is a US recession appearing in the data?
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Daily Chartbook: #268
Christophe Barraud: Eurozone Monetary Developments In July Point to Recession Risks
Brent Donnelly: Coming Events, and CHF
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All times in British Summer Time (BST)
HUF (13:00): NBH
USD (15:00): Jolts Job Openings exp 9450k (prior 9582k)
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but those repatriations are not month end activities per se, they happen with frequency throughout the year when cash flow hedges are placed.
An FYI, US corporates buy dollars today for month end settlement, not for tax purposes per se, but for accounting purposes. a majority of them hedge their balance sheet assets overseas on a month-end to month-end basis. very mechanical hedging