The Morning Hark - 18 June 2024
Today’s focus...Stocks keep going but all else remains quiet. RBA unchanged.
Overnight Highlights
Prices are at 6.30 BST/1.30 EST, with changes reflecting movement from midnight GMT
Oil - Oil unchanged in Asia with Brent and Crude August futures currently at 84.10 and 79.60. Positive day yesterday on little news pointing to more of a flow driven move higher.
EQ - Asian equity markets smalls lower overnight with the Hang Seng and Nikkei futures currently trading at 17,927 and 38,365 respectively.
The US indicies unchanged with the S&P and Nasdaq futures now at 5545 and 20,177 respectively. Seems the market is keen to continually buy blind as the US indicies climb ever higher. Although stats show that the real power, once again, lies in the Mag7. As ZeroHedge points out, in q2 alone those 7 stocks have added more than 3x market cap than the other 493 stocks in the S&P500.
Gold - Gold unchanged in Asia with the August futures trading currently at 2336.
FI - US yields little changed over the past few sessions with the US2y futures trading at 4.76% whilst the US10y futures yield at 4.27%.
European yields steadied a touch to start the week with them edging a touch higher with the German 10y closing at 2.41% and the Italian 10y yield at 3.94%.
UK gilt 10y at 4.12%.
FX - The USD flat in Asia with the USD Index currently at 105.44. The majors now trading at; JPY, EUR and GBP 157.70, 1.0720 and 1.2695 respectively.
Today’s major FX option expiries we have an eclectic mix; EURUSD sees $€1bn at 1.07 and 1.0670.
Others - Bitcoin and Ethereum after a decent day where it rallied off the recent lows, late in the day those Asian red candles took back over again and pushed the pair down to recent lows. The pair currently at 65,790 and 3460 respectively.
Macro Themes At Play
Central Bank Speakers
Fed’s Harker viewed one interest rate cut as appropriate for this year based on the current forecasts. Although two cuts or none are also quite possible depending on the data.
He’d like to see several more months of improving inflation.
Long term stubbornness of shelter inflation remains a concern, as does service sector inflation.
ECB’s Lane has a lot of confidence on the fiscal effects on inflation. However we should not be too sensitive to monthly inflation data, we need to differentiate between noise and signals. We still see bumps in inflation. Need to see domestic services inflation momentum come down.
If we get welcome surprises, on inflation or the economy weakens more than expected, then we can cut quicker.
Lagarde, given the turmoil in the French bond market, said that the ECB was paying attention to the good functioning of the markets.
BoJ’s Ueda claimed that service prices continue to rise moderately, reflecting wage rises.
He also went on to say that the BoJ could raise interest rates next month depending on the economic data available at the time.
He stressed that the bond buying tapering and interest rate hikes were two different things.
The Day Ahead
The RBA Meeting went without much fanfare. Rates unchanged. Statement; RBA remains vigilant on inflation, no change to guidance on the rate path and acknowledged recent data such as softer wages and growth and higher unemployment.
Press conference to start as we go to press but expect little new.
The morning sees the final EU Inflation print for May as well as the ZEW Sentiment Indexes from EU And Germany.
The afternoon session is all about the US with Retail Sales, Industrial and Manufacturing Production for May.
Plus a heap of central bankers.
Early doors tomorrow Japan Tankan and Trade Data.
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Main Highlights Ahead
All times in BST (EST+5 / CET-1 / JST-9)
The main highlights for the day ahead ahead in terms of data and speakers:
Tuesday
EU Inflation Rate MoM Final May consensus 0.2% vs previous 0.6% (10.00 BST)
EU Inflation Rate YoY Final May consensus 2.6% vs previous 2.4% (10.00 BST)
EU Core Inflation Rate YoY Final May consensus 2.9% vs previous 2.7% (10.00 BST)
EU ZEW Economic Sentiment Index June consensus 47.8 vs previous 47 (10.00 BST)
Germany ZEW Economic Sentiment Index June consensus 50 vs previous 47.1 (10.00 BST)
US Retail Sales MoM May consensus 0.2% vs previous 0% (13.30 BST)
US Retail Sales YoY May consensus % vs previous 3% (13.30 BST)
US Industrial Production MoM May consensus 0.3% vs previous 0% (13.30 BST)
US Industrial Production YoY May consensus % vs previous -0.4% (13.30 BST)
US Manufacturing Production MoM May consensus 0.3% vs previous -0.3% (13.30 BST)
US Manufacturing Production YoY May consensus % vs previous -0.5% (13.30 BST)
Fed Speakers
Cook (02.00 BST)
Barkin (15.00 BST)
Collins (16.40 BST)
Kugler (18.00 BST)
Logan (18.00 BST)
Goolsbee (19.00 BST)
ECB Speakers
Knot (10.00 BST)
Cippollone (13.00 BST)
de Guindos (14.30 BST)
Villeroy (17.00 BST)
Early Wednesday
Japan Reuters Tankan Index June consensus vs previous 9 (00.50 BST)
Japan Balance of Trade May consensus JPY-1300Bn vs previous JPY-462.5bn (00.50 BST)
Japan Exports YoY May consensus 13% vs previous 8.3% (00.50 BST)
Japan Imports YoY May consensus 10.4% vs previous 8.3% (00.50 BST)
Japan BoJ Monetary Policy Meeting Minutes April meeting minutes (00.50 BST)
Good luck.
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