The Morning Hark - 28 Feb 2024
The Morning Hark - 28 Feb 2024
Today’s focus...The petition for doing away with the Asia session is growing ever bigger.....
Overnight Highlights
Prices are at 7.00 GMT/2.00 EST, with changes reflecting movement from midnight GMT
Oil - Oil off smalls in Asia after a decent day yesterday with Brent and Crude April futures trading at 83.20 and 78.50 respectively. Yesterday’s rally was based on the potential for extended OPEC cuts. According to three sources, OPEC+ is likely to consider voluntary oil output cuts into q2 and may extend them further too the year end.
EQ - Asian equity markets seeing nothing of note overnight with the Nikkei and Hang Seng futures lower at 39,175 and 16,540 respectively.
The US indices little changed with the S&P and Nasdaq futures currently at 5085 and 17,990 respectively.
Gold - Gold still very much rangebound in its 2000/2050 band. The April futures currently trading at 2038.
FI - Global yields softened in Asia with the US2y and US10y yields currently at 4.68% and 4.29% respectively.
European yields firmed up yesterday with the German 10y at 2.47% and the Italian 10y yield at 3.90% but still very much rangebound.
UK gilt 10y similarly so at 4.13%.
FX - FX in Asia same old with the USD a touch firmer, USD Index currently at 103.98. The JPY, EUR and GBP all a touch softer with them currently sitting at 150.60, 1.0830 and 1.2660 respectively.
Big mover on the day is the NZD which finds itself one percent lower at 0.6110 post RBNZ.
Today’s FX option expiries sees €6bn around the 1.0865/50 region in the EUR and $2bn at 151 in USDJPY.
Others - Bitcoin and Ethereum holding up well overnight near their recent highs with again good inflows into the ETFs yesterday. The pair currently at 57,100 and 3255 respectively.
Macro Themes At Play
Recap
US Durable Goods MoM for January down 6.1%, worse than both previous and expected and indeed the worst MoM reading since the pandemic. The mitigating circumstances are that its all about your Boeing! In January they received 3 orders as opposed to over 300 in December. I guess that will shift the dial a touch.
Central Bank Speakers
Fed’s Bowman was fully onboard to raise rates if inflation progress stalls or reverses. However if inflation moves sustainably towards the 2% goal then it would eventually be appropriate to cut interest rates. The latest inflation print suggests that progress on inflation is slower but she expects it will decline further with policy rate held steady.
BoE’s Ramsden felt that key indicators of inflation remain elevated although he supported the more balanced outlook on risks to inflation set out in the MPC’s latest forecasts. HE is also looking for more evidence about how entrenched this persistence will be and therefore how long the current level of rates needs to be maintained. Interestingly he noted that UK services inflation was down more than seen.
Riksbank’s Thedeen claimed that the SEK has entered a somewhat more stable phase (he could pretty much say FX as a whole!).
The Day Ahead
The Australia Monthly CPI for January was encouraging with it matching last month’s reading of 3.4% but lower than expected. The print was the lowest since late 2021.
RBNZ meeting as expected kept rates on hold at 5.5% for the fifth straight meeting but left the opportunity for a further hike open.
Governor Orr was very upbeat. Domestic price pressures are easing as expected however underlying inflation still a concern but headline inflation is easing. Central banks may have to hold rates higher than markets expect. The committee discussed a further hike but the strong consensus was that rate levels were sufficient. They did not however discuss a cut.
Overall the press conference and statement had a less aggressive view on inflation than previously.
Day of second tier data with EU Economic Sentiment for February and the 2nd reading of US q4 GDP. As well as the usual “patient” central banker speak.
Overnight Japan Retail Sales and Industrial Production for January as well as Australia’s Retail Sales print for the same period and not to feel left out we have the German equivalent as we go to press tomorrow.
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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
EU Economic Sentiment Feb consensus 96.7 vs previous 96.2 (10.00 GMT)
US GDP Growth Rate QoQ 2nd est q4 consensus 3.3% vs previous 4.9% (13.30 GMT)
US GDP Price Index QoQ 2nd est q4 consensus 1.5% vs previous 3.3% (13.30 GMT)
US PCE Prices QoQ 2nd est q4 consensus 1.7% vs previous 2.6% (13.30 GMT)
US Core PCE Prices QoQ 2nd est q4 consensus 2% vs previous 2% (13.30 GMT)
Japan Industrial Production MoM Prel Jan consensus -7.3% vs previous 1.4% (23.50 GMT)
Japan Industrial Production YoY Prel Jan consensus % vs previous -0.7% (23.50 GMT)
Japan Retail Sales MoM Jan consensus % vs previous -2.9% (23.50 GMT)
Japan Retail Sales YoY Jan consensus 2.3% vs previous 2.1% (23.50 GMT)
Fed Speakers
Bostic (17.00 GMT)
Collins (17.15 GMT)
Williams (17.45 GMT)
ECB Speakers
McCaul (14.00 GMT)
BoE Speakers
Dhingra (14.00 GMT)
Mann (15.30 GMT)
Early Thursday
Australia Retail Sales MoM Prel Jan consensus 1.5% vs previous -2.7% (00.30 GMT)
Germany Retail Sales MoM Jan consensus 0.5% vs previous -1.6% (07.00 GMT)
Germany Retail Sales YoY Jan consensus -1.5% vs previous -1.7% (07.00 GMT)
Good luck.
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