The Morning Hark - 6 Dec 2023
Today’s focus... JOLTS lower the yields, AUD growth barely there and will Nagel do a Schnabel?
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Overnight Highlights
Prices are at 7.05 GMT/2.05 EST, with changes reflecting movement from midnight GMT
Oil - Oil having another quiet Asian session with Brent and Crude February futures currently flat at 77.30 and 72.50 respectively. The OPEC+ decision still muddying the waters and Moody’s downgrade of China’s credit rating did little to help the oil demand side. The report cited a lack of government stimulus and a property market downturn as the major risks to the economy. Hardly new news boys tbh!
EQ - Asian equity markets at last having a green day in the Asia session with the Hang Seng and Nikkei futures both up over one percent at 16,475 and 33,310 respectively as they play catch up with the late US rally and try to regain some of their recent lost ground.
The US indices consolidating their late gains from yesterday after the JOLTS report pushed US rates lower. The S&P currently at 4588 whilst the Nasdaq is at 15,975.
Gold - Gold seems to be back in a no-man’s land scenario having broken 2000 and remained above, broken the ATH and had some fun but now broken back below. So for now it seems any longer term direction has to come from a breach of the 2000 downside level or have a look again at the topside breakout level around 2085. For now Feb futures at 2045 says nothing from a trading point of view other than play the range.
FI - Global yields a touch firmer in Asia as they steady after yesterday’s sell off. Currently the US2y and US10y sitting at 4.61% and 4.19% respectively.
European yields softening again yesterday after the ECB’s Schnabel comments. For once EUR rates lead the charge lower with German 10y closing at 2.25% and the Italian 10y yield at 3.99%. Both at levels last seen back in the early summer.
UK gilt yields similarly so with the 10y closing at 4.04%.
FX -Quiet Asian session with the USD Index little changed at 104 and holding onto its gains from yesterday. The JPY, EUR and GBP all equally quiet with them currently sitting at 147.10, 1.0780 and 1.26 respectively.
Interesting to note the USD dislocating from the US yields move. This was more of a reflection of the larger comparative yield sell off in Europe post Schnabel which put the EUR under pressure.
FX option expiries wise today in the EUR we see €1.5bn rolling off at 1.08. In the NZD we have NZD 1.5bn at 0.61.
Others - Bitcoin and Ethereum sees the FOMO rally continue with the pair now at 43,700 and 2275 respectively. “To the moon” and all that! To be fair it has been an impressive rally for the pair especially given the lack of interest they have taken in other markets’ recent travails.