The Morning Hark - 10 Jan 2024
Today’s focus...The SEC clown car knows no limits.
Overnight Highlights
Prices are at 7.00 GMT/2.00 EST, with changes reflecting movement from midnight GMT
Oil - Oil once again finding a semblance of stability in Asia with Brent and Crude March futures up a touch at 77.80 and 72.70 respectively. Supply side worries returned to the fore as Middle East tensions remain and Libya’s biggest oilfield continues to be in limbo. In addition the API Data showed a larger draw than had been expected although that was tempered somewhat with strong builds in both gasoline and distillates.
EQ - Asian equity markets mixed with strong gains in the Nikkei as it continues to test levels last seen in the early ‘90s. The Nikkei futures up close to two percent at 34,470 led by exporters buoyed by the weakening JPY. The Hang Seng futures not following the lead and continue their recent trend of softening off close to one percent at 16,100.
The US indices flat overnight consolidating near their recent highs with the S&P currently at 4790 whilst the Nasdaq is at 16,820.
Gold - And repeat gold is back to its nailed to the wall mode with Feb futures trading at 2030.
FI - Global yields little changed with the US2y and US10y currently at 4.36% and 4.02% respectively.
European yields firmed a touch despite the dovish ECB chatter with the German 10y at 2.19% and the Italian 10y yield at 3.85%.
UK gilt 10y little changed at 3.78%.
FX - The USD consolidating overnight and retaining its gains from yesterday with the USD Index currently at 102.60. The JPY, EUR and GBP currently sitting at 145.10, 1.0925 and 1.2690 respectively. As has been the pattern of late, the JPY is taking the brunt of the USD strength
FX option expiries today sees some large expiries around where we currently sit with €2.8bn at 1.0985 and €1bn at 1.0925 in the EUR and $2bn at 145 in USDJPY.
Others - Bitcoin and Ethereum quiet after yesterday’s drama with the pair currently at 46,000 and 2380 respectively.
The ETF frenzy continues yesterday with a surreal day taking us back to the thought it should definitely be renamed WTF! Lots of chatter throughout the day that Wednesday post close would see the announcement of approval with trading starting the next morning. Indeed top executives at VanEck and Valkyrie came out and said this was a done deal. Gensler even put out a tweet warning investors of the risks of investing in BTC.
Post close yesterday however, on the SEC’s X account, “approval for the ETFs” was announced. Ten minutes later this was denied by the SEC who claimed that their account had been hacked. X subsequently revealed that the SEC was not using 2FA for their account authentication suggesting that the SEC knows FA about anything! Here are the people that are supposedly protecting the country’s investor community but can barely take care of their own security. Anyway off point. The approval/denial managed to create a 5% swing in the price with a knee jerk spike close to 48k and a subsequent sharper sell off to around 45.5k. Everyone loves a bit of volatility!
So we wait………maybe once they’ve reversed their clown car back down the one way street the SEC can point it in the right direction and put everyone out of their misery! Over to you Gary and co.
Macro Themes At Play
Recap
EU Unemployment Rate for November a touch better than expected at 6.4% but old news.
Central Bank Speakers
ECB’s Centeno in an interview expressed his view that the central bank do not need to wait until May to make monetary policy decisions. Suggesting that rate cuts could come in the first quarter of the year.
Villeroy stated that the ECB would cut rates once inflation expectations settle at target 2%. However the bank must remain vigilant on inflation data.
The Day Ahead
Overnight the Australia Monthly CPI Indicator for November came in cooler than expected at 4.3%, a second month of moderation, suggesting that the RBA will remain on hold at their next meeting.
Just as we go to print the December Norway Inflation Report came in a touch softer than expected with MoM core at 0.2% bringing the YoY down to 5.5% an eighteen month low. Meanwhile headline moderated on the MoM to 0.1% keeping the YoY at 4.8%. Looks enough to keep the Norges Bank on hold for now.
Quiet day ahead again with just some central bank speak and of course the potential WTF announcement. I reposted the Concoda piece on the Reverse Repo for those that missed it yesterday.
Concoda - Reverse Repo Endgame
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Main Highlights Ahead
All times in GMT (EST+5 / CET-1 / JST-9)
The main highlights for the day ahead ahead in terms of data and speakers:
Wednesday
ECB Speakers
de Guindos (08.20 GMT)
Schnabel (09.00 GMT)
BoE Speakers
Bailey (14.15 GMT)
Breeden (14.15 GMT)
Fed Speakers
Williams (20.15 GMT)
Good luck.
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