The Morning Hark - 26 Mar 2024
Today’s focus...Bostic sticks to one, Goolsbee goes for three and Cook remains on the boil. Suzuki fundamentals go awry. Neumann looks to make a return to the world of fussball and free beer!
Overnight Highlights
Prices are at 7.00 GMT/3.00 EST, with changes reflecting movement from midnight GMT
Oil - Oil flat in Asia. Currently Brent and Crude May futures trading at 86.70 and 81.90. Bid tone returned yesterday with the continued tensions in the Middle East and Russia.
The UN Security Council passed their Gaza ceasefire resolution with the US abstaining. This prompted PM Netanyahu to cancel the Israeli’s delegation trip to Washington pushing back further any chance of a ceasefire.
EQ - Asian equity markets up a touch overnight with the Hang Seng and Nikkei futures currently at 16,760 and 40,260 respectively.
The US indices flatlining in Asia with the S&P and Nasdaq futures currently at 5290 and 18,570 respectively and basically where we opened yesterday.
Gold - Gold quiet in Asia with April futures currently trading at 2170.
FI - US yields steady overnight with the US2y futures trading at 4.60% whilst the US10y futures yield at 4.24%.
European yields started the week with a bid tone but still well within their recent ranges with the German 10y at 2.38% and the Italian 10y yield at 3.69%.
UK gilt 10y similarly at 4%.
FX - FX in Asia continuing the softer USD tone from yesterday after the weaker US data. The USD Index currently off smalls at 104.12. The majors up a touch; JPY, EUR and GBP currently at 151.30, 1.0850 and 1.2650 respectively.
Today’s FX option expiries today sees in the EUR around €4.2bn at 1.0860/70. USDJPY sees $1.2bn at 151.00/25. In GBP we have £1bn around 1.2685/1.27 and in AUD we see Aud3.2bn between 0.6545/60.
Others - Bitcoin and Ethereum had a decent start to the week as the ETF bid is renewed. The pair currently trading at 70,700 and 3660 respectively.
The inflows have returned with aplomb with Fidelity alone seeing over $250m flow into their ETF. The ETF filings start to be publicly available as of next week so we shall have a better feel for who is actually behind these flows.
In other news the SEC are seeking a total of $2bn in fines and penalties from Ripple surrounding their XRP token. Good luck with that one Gazza!
Macro Themes At Play
Recap
US New Home Sales Feb dropped unexpectedly to 0.662m bucking the recent uplift in US housing data.
Central Bank Speakers
ECB speakers were of little note. The Fed a touch more interesting Bostic stuck to his one cut and Goolsbee held onto his three. Cook was a little bit more Powell-like, as you’d expect, with her more balanced approach to the risks to the Fed’s dual mandate and a cautious approach as we head closer to rate cuts.
Fed’s Bostic expects the economy and inflation to slow gradually. He goes onto repeat his call for just one rate cut this year. Cutting rates too soon could be more disruptive.
Goolsbee felt that we were in a bit of a “murky” period with inflation. The Fed has to strike a balance with its dual mandate. He still wanted to see progress with inflation coming down with the main factor remaining housing. In contrast to Bostic he saw 3 cuts this year.
Cook insisted that cutting too late would unnecessarily harm the US economy but cutting too early could risk inflation becoming entrenched. The careful approach to easing policy over time can ensure inflation returns sustainably to 2% while striving to retain a strong labour market. The current low rate of increase on new rental leases suggests housing services inflation will continue to fall. In conclusion she favours a cautious approach to policy easing.
ECB’s Panetta claimed that there was a growing consensus within the ECB governing council on a possible rate cut. Inflation is quickly falling to 2%.
Lane was confident that the wage normalisation process was on track.
Japan’s Finance Minister Suzuki back with the usual mantra regarding the JPY. The authorities are closely watching FX moves with a high sense of urgency. They won’t rule out any steps. FX should move in a stable manner reflecting fundamentals. I think someone needs to explain to him that despite the BoJ’s actions last week there’s still a good 5% daylight between Japanese and US rates.
In Other News
TMH loves a WeWork story! Especially as TMH is written from one of We Work’s old buildings and its a story that just keeps on giving.
The latest one is that Adam Neumann has submitted a bid to buy back the company through his new company, “Flow”. You got to love the brass neck of the guy and, given the size of his neck, that’s a lot of brass. So having been given a $1bn package to walk away from his beloved company he returns with a band of brothers, like a modern day Pied Piper, with $500m of swag in his bags and the promise of much more. What could possibly go wrong? Haven’t we been down this road before? As a reminder at its height WeWork was worth $47bn…..for a Regus with free beer and a fussball table.
Bloomberg - Adam Neumann and WeWork
The Day Ahead
Some minor US data and a smattering of central bank speakers his all she wrote today.
Overnight Australia’s Inflation Report and the BoJ’s Tamura speaks.
👏 If you found this briefing helpful, please show the desk some appreciation by giving it a ‘Like’ or a ‘Comment’ at the bottom of the page.
Stay on top of the latest market narratives throughout the day using our curated research & commentary channels on Harkster.com
Main Highlights Ahead
All times in GMT (EST+4 / CET-1 / JST-9)
The main highlights for the day ahead ahead in terms of data and speakers:
Tuesday
BoC Rogers Speaks (12.15 GMT)
US Durable Goods Orders MoM Feb consensus 1.1% vs previous -6.1% (12.30 GMT)
US Richmond Fed Manufacturing Index Mar consensus vs previous -5 (14.00 GMT)
ECB Speakers
Lane (19.00 GMT)
Early Wednesday
Australia Monthly CPI Indicator Feb consensus 3.5% vs previous 3.4% (00.30 GMT)
BoJ Tamura Speaks (01.00 GMT)
Good luck.
The information provided in this post is for general information purposes only. No information, materials, services, and other content provided in this post constitute solicitation, recommendation, endorsement or any financial, investment, or other advice. Seek independent professional consultation in the form of legal, financial, and fiscal advice before making any investment decision.