The Morning Hark - 30 Aug 2022
Today’s focus ……White House trading NFP and look out for the Fed’s Williams.
All prices are at 7.20 BST with changes reflecting movement from midnight BST
Oil - Brent and Crude November futures down smalls in Asia trading at 102.50 and 96 respectively. Oil took the opportunity yesterday in low liquidity to sneak out of its recent tight ranges and push back to levels last seen at the start of the month. The rally was based on supply tightness issues with talk of further disruption out of Libya as the potential for a crippling civil war start to grow. Whilst the old OPEC+ production cut stories will not go away.
EQ - Equity markets in Asia overnight showed mixed fortunes with the Nikkei and Kospi both up on the day, mirroring the somewhat steadier US indices, at 28,203 and 319 respectively. However the Hang Seng suffering down smalls at 19,821 with the tech majors pulling the overall index down ahead of earnings which are feared to have been negatively impacted by Covid restrictions in the quarter. .
The Nasdaq and S&P both steadying the ship in the Asian session currently trading at 12,540 and 4042 respectively. Markets characterised by low volumes and light trading as they take stock of Powell’s message and look ahead to the big data points later in the week. The support level around the 4020 has held for now but 4000 does feel too tempting for the markets not to try and at least attempt to recapture. Let’s see. The Fed’s Kashkari endeared himself to the markets with his comments that he was “happy to see how Chair Powell’s Jackson Hole speech was received” by the markets in what was a sea of red.
Gold - Gold Dec futures flat in the Asia session at 1746 holding onto their small gains from yesterday as the USD retreated from its recent highs with US yields also tempering some of their gains. The 1720 support has so far remained untroubled. Near term resistance remains in the 1750/55 noisy zone which we tested a number of times yesterday.
FI - US yields continued their retreat from their recent highs in Asia with the US2y and 10y yields currently trading at 3.41% and 3.08% respectively.
European yields continue to take their lead from the hawkish ECB speakers with the German and Italian 10y yields closing at 1.509 and 3.795 respectively.
FX - The king has hardly been dethroned but the USD certainly took a step back yesterday and the USD Index is currently trading at 108.70.The EUR lead the way fuelled by the ECB hawkish chatter and indeed recaptured parity with it currently trading at 1.0001. The JPY and GBP both took some relief also currently trading at 138.52 and 1.1705 respectively. CNH however has not managed to get some breathing space and is still trading weakly at 6.92.
Others - Bitcoin and Ethereum, speaking of relief have clawed their way up a touch to 20,410 and 1580 respectively.
Little of note to speak about today so I will not waste your time and ramble. One thing I did notice however was the White House press secretary remarking that the administration are expecting a slowing in jobs growth. May be worth bearing in mind given how eager they were to anticipate poor inflation data in the last few months.
On the day we have the preliminary reading for German inflation for August where a further uptick is expected which will surely only add to the hawkish calls from the ECB folks especially as the peak for European inflation lies sometime in the future. Later in the day US consumer confidence which is expected to show an uptick for the month of August.
Finally some more central bank speakers from the Fed and ECB with more of the same chatter expected probably the highlight will be Williams, given his closeness to Powell, as he speaks with Timiraos of the WSJ.
One further point to note is some early data tomorrow morning with July retail sales and industrial production out of Japan and some China PMIs for August.
One last point I post below Lyn Alden’s excellent investment newsletter for August. Its a longer term view on markets but as ever it is well worth the read. Always insightful and a perfect read for what looks to be a relatively quiet day ahead.
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German Inflation Rate YoY Prel Aug consensus 7.8% vs previous 7.5% (13.00 BST)
US Consumer Confidence Aug consensus 97.9 vs previous 95.7 (15.00 BST)
Barkin (13.00 BST)
Williams (16.00 BST)
Vasle (12.15 BST)
Holzmann, Stournaras, Wunsch and Muller (17.00 BST)
Japan Industrial Production MoM Prel Jul consensus -0.5% vs previous 8.9% (00.50 BST)
Japan Retail Sales YoY Jul consensus 1.9% vs previous 1.5% (00.50 BST)
China NBS Manufacturing PMI Aug consensus 49.2 vs previous 49 (02.30 BST)
China NBS Non-Manufacturing PMI Aug previous 53.8 (02.30 BST)
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