Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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APAC Global Macro Morning Brief – Happy Macro Thu 14 Nov 2019: Powell Signals The US Ship Continues To Sail Well
Kay Van-Petersen
Global Macro Strategist
Summary: Morning APAC Global Macro & Cross-Asset Snapshot
(Note that these are solely the views & opinions of KVP, they do not constitute any trade or investment recommendations of any kind.)
To see this wk’s Macro Monday click here
APAC Global Macro Morning Brief
Happy Macro Thu 14 Nov 2019: Powell Signals The US Ship Continues To Sail Well
Powell testified overnight before Congress on the state of the US economy – “Baseline outlook remains favourable” was how he kicked of his speech, which kind of sums up the Fed being on the side-lines for now
He did flag key risks as being sluggish growth abroad, trade developments & also low inflationary pressures. For full video of the testimony click here
It definitely feels like the Fed want to see the effect of the 75bp cuts that they have conducted over the last few months, which makes sense given the lag effect of monetary policy. Overall very balanced Powell
He will be continuing again tonight @ 23:00 SGT/HKT/CST (10:00 AM ET)
As a whole the price action across asset classes was quite interesting. The S&P cash index closed up a touch at 3094 +0.07%, with tiny pop in the VIX to 13.00 +2.5%
The more interesting move was the pullback in yields, with US10yr from recent 1.97% highs to clos down sub 1.90% at 1.8860%. This lead to a pop up in gold & silver by +0.50% & 1.22% respectively to 1464 & 16.98
Oil also lifted up by half a percent to 62.37 – worth noting that due to the shorter US week, we will actually get the wkly US inventories tonight, as opposed to the usual Weds
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At the same time, it looked like one autocrat talking to another with the Trump & Erdogan press event. Say what you want, yet Trump seems to be clearly long Turkey & that is likely good for Turkish assets
The US listed Turkish iShares MSCI etf TUR had a big uplift of +1.47% to 26.18 – chart looks like we are about to break out higher, with the 28.34 highs of January potentially within reach. Trump was talking about $100bn trade deal with Turkey
Once again say what you want about Trump… +9yrs of The Apprentice, this dude is a master instigator, check out one of the things he said:
“I think the president [Erdgogan] has a great relationship with the Kurds”
Just amazing & that’s the magic. Folks will focus on comments / statements like this, whilst he moves on to doing whatever he wants
It will be interesting to see if Congress has other plans/ideas around Turkey, similar to what we previously saw with Russia
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Worth also noting overnight that US inflation was mixed, beat on headline 1.8%a 1.7%e 1.7%p, whilst Core CPI which is more important missed at 2.3%a 2.4%e/p. In the UK headline missed, yet Core CPI was in line at 1.7%
Euro-zone industrial production beat at +10bp a vs. -20bp e +40bp p
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Today once again about Powell’s 2nd half of testimony to Congress. We do also have three more FOMC members speaking: Quarles, Clarida & Evans
We have jobs data out of Aus, always a big mover for markets there both equities & the Aussie crosses, following which we will get the monthly China growth data
Namaste
-KVP
Today:
- AU: Jobs Data, MI Inflation Expectations
- CH: FAI, IP, RS U/R
- EZ: GER prelim GDP, EZ Flash GDP & Flash Jobs Data
- UK: RS, 30yr bond auction, CB Leading Index
- US: PPI, Core PPI, Crude Oil Inventories, Natural Gas Storage
- FOMC’s Powell day two testimony on the economy @ 23:00 SGT/HKT/CST (10:00 AM ET)
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