China October M2 money supply +10.3% vs +10.3% y/y expected 0 (0)

  • Prior +10.3%
  • New yuan loans ¥738.4 billion vs ¥665.0 billion expected
  • Prior ¥2.31 trillion

After a big jump in new loans at the end of Q3, there is a bit of a dip in October (likely seasonal factors) but it comes in above estimates. This is also still higher than the same period a year ago, which saw ¥615.2 billion in new loans then. Overall, it still shows that China is maintaining support for the economy as outstanding yuan loans are seen roughly 11% higher than October last year.

This article was written by Justin Low at www.forexlive.com.

Go to Forexlive

Weekly Market Outlook (13-17 November) 0 (0)

UPCOMING EVENTS:

  • Monday: Japan PPI.
  • Tuesday:
    UK Jobs
    data, German ZEW, NFIB Small Business Optimism Index, US CPI.
  • Wednesday:
    Japan
    GDP, Australia Wage data, China Industrial Production and Retail Sales, UK
    CPI, US PPI, US Retail Sales, PBoC MLF.
  • Thursday:
    Australia
    Jobs data, US Jobless Claims, US Industrial Production, NAHB Housing
    Market Index, New Zealand PPI.
  • Friday:
    UK
    Retail Sales, Canada PPI, US Building Permits and Housing Starts.

Tuesday

The UK unemployment rate is expected to
remain unchanged at 4.3% in the three-month period to September and the
employment change to contract by 198K. The average earnings including bonus are
seen at 8.3% vs. 8.1% prior, while the average earnings excluding bonus are
expected to remain unchanged at 7.8% vs. 7.8% prior.

There’s no consensus at time of writing
for the US headline CPI data. The Core CPI Y/Y is expected to hold steady at
4.1% vs. 4.1% prior,
while the M/M reading is seen at 0.3% vs. 0.3% prior. The Fedspeak has been
leaning on the hawkish side since the last FOMC meeting and although the market
expects the Fed to keep rates steady until the mid-2024, we might see another
rate hike if the upcoming two CPI reports fall short of their expectations and
show persistently elevated underlying inflation. The whole reaction function
will need to be paired with the NFP report in December of course as another
notable
miss
and increase in the unemployment
rate will keep the Fed on the sidelines.

Wednesday

The Australian Wage price index for Q3 is
expected to increase by 1.3% vs. 0.8% prior for the Q/Q reading and 3.9% vs.
3.6% prior for the Y/Y figure. The RBA
recently hiked by 25 bps
citing
surprisingly persistent services inflation. The central bank is keeping the
door open for further tightening as it left in the statement the line “whether
further tightening of monetary policy is required to ensure that inflation
returns to target in a reasonable time frame will depend upon the data and the
evolving assessment of risks”.

The UK CPI Y/Y is expected to fall to 4.8%
vs. 6.7% prior,
while the M/M reading is seen at 0.1% vs. 0.5% prior. The Core CPI Y/Y is
expected at 5.8% vs. 6.1% prior and the M/M figure at 0.4% vs. 0.5% prior. The BoE
has kept rates steady for two consecutive meetings and it will be harder for
them to do so at the next one as well if this week’s employment and inflation
data beats expectations.

The US Retail Sales have been surprisingly
hot in the past few months, but this time around the data is expected to show a
decline of -0.1% M/M vs. 0.7% prior.
Although, the data is unlikely to change the Fed’s stance, the central bank
won’t be pleased with too hot figures.

Thursday

The Australian employment change is
expected at 18K vs. 6.7K prior
with the unemployment rate ticking higher to 3.7% vs. 3.6% prior. Although the
labour market has been showing signs of cooling, it remains historically tight,
and the RBA would like to see more softening.

The US Jobless Claims lately have been
pointing to a softening labour market via lower job opportunities rather than
more layoffs. In fact, Continuing Claims have been rising steadily while
Initial Claims remained subdued around the 200-220K level. There’s no consensus
at the time of writing for this week’s data, but as always it will be one of
the most important releases.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Go to Forexlive

Moody’s changes outlook on USA soverign ranking to negative, affirms Aaa-rating 0 (0)

Fitch and S&P have already downgraded the US and now Moody’s has taken a step in that direction. The credit ratings agency maintained the USA’s top Aaa rating but changed its outlook to ’negative‘.

  • Downside risks to the US‘ fiscal strengths have increased and may no longer be fully offset by the sovereign unique credit strengths
  • Expects that the US‘ fiscal deficits will remain very larger, significantly weakening debt affordability
  • Sees US debt affordability to decline further, steadily and significantly, to very weak levels vs other highly-rated sovereigns
  • Political polarization in Congres raises risk successive govt not able to reach consensus on plan to slow decline in debt affordability
  • US can carry a higher debt burden than other countries

The current US funding package goes until November 17 (next Friday) and I strongly suspect that will underscore some of the concerns from Moody’s.

This article was written by Adam Button at www.forexlive.com.

Go to Forexlive

Forexlive Americas FX news wrap: Big gains for stocks, FX unimpressed 0 (0)

Markets:

  • Gold down $21 to $1936
  • US 10-year yields up 2.2 bps to 4.65%
  • WTI crude oil up $1.64 to $77.38
  • S&P 500 up 1.4%
  • EUR leads, JPY lags

There was a stark contrast to what was happening in the stock market and elsewhere. The finishing FX moves on the day were limited with modest volatility throughout. USD/JPY tracked up towards the top end of the range and that will be something to watch next week but there was no real threat of breaking the recent high of 151.74.

However equity markets roared higher in non-stop bidding after the first hour of trading. There was no indication of what was to come in the futures market as it was only fractionally higher as New York woke up. One powerful story may have been Nvidia’s end-around on the Chinese chip blockade as all chip companies surged but, ultimately, the rally was much broader than that.

Interestingly though, European markets didn’t take part and there was no help from Treasury yields, which were higher led by the front end.

Some support for the US dollar came from the UMich consumer sentiment report, which included hot inflation metrics. That, and some buying of USD into the fix, sent the dollar to the daily extremes on a few pairs but the bump was limited to 20 pips and faded later.

CAD did get some independent support as oil prices rebouned and the risk trade improved but that was only enough to erased earlier declines.

Have a great weekend. Next week features US CPI and retail sales, which will certainly be market movers.

This article was written by Adam Button at www.forexlive.com.

Go to Forexlive

Tech Stocks surge as major indices close higher for second consecutive week 0 (0)

The major stock indices are closing near session highs with the NASDAQ index leading the way. All 3 major indices are closing above their 100-day moving averages (bullish). All 3 indices are closing higher for the week.

A snapshot of closing levels shows:

  • Dow industrial average +391.16 points or 1.15% at 34283.09. Its 100-day moving average is at 34266.16
  • S&P index up 67.87 points or 1.56% at 4415.23. Its 100-day moving average is at 4402.54
  • NASDAQ index up 276.65 points or 2.05% at 13798.10. It’s 100-day moving averages at 13618.08.

For the week, each of the major indices close higher for the 2nd consecutive week:

  • Dow Industrial Average rose 0.65%
  • S&P index rose 1.31%
  • NASDAQ index rose 2.37%

Big gainers this week included:

  • Roblox, 10.06%
  • Broadcom, 8.48%
  • Lam Research +8.10%
  • Uber, 8.02%
  • Nvidia, +7.4%
  • Snowflake, +7.01%
  • Intuit, +6.09%
  • Adobe, +5.95%

Looking at the Dow 30 for the week:

  • Apple rose 5.52%
  • Microsoft rose 4.78%
  • Disney rose 3.75%
  • Salesforce rose 2.98%
  • JP Morgan rose 2.41%

Loser in the Dow 30 were:

  • Walgreens, -6.11%
  • Chevron, -3.15%
  • J&J -2.70%
  • Merck, -1.89%
  • HomeDepot -1.38%

This article was written by Greg Michalowski at www.forexlive.com.

Go to Forexlive

The evolution of Fed funds futures market pricing 0 (0)

Here is a great chart snapshot from BMO showing how Fed pricing has changed in the past year. Most of 2023 involved the market buying into the idea of higher-for-longer Fed funds but since October 18, there has been a fresh attempt to price in rate cuts, despite ongoing hawkish Fed rhetoric. That came after a series of softer US economic data points, including the ISM survey and non-farm payrolls.

This article was written by Adam Button at www.forexlive.com.

Go to Forexlive

Yellen: We have not seen an impact on the Treasury market from the ICBC attack 0 (0)

Yesterday’s poor 30-year Treasury auction reverberated through the market but later in the day, many people were arguing that it should be ignored because a ransomware attack kept China’s largest bank — ICBC — out of bidding.

Yellen now says there was no impact on the Treasury market from the attack. Could she mean that there’s been no direct impact?

Whatever happened, US 30-year yields are back to where they were before the sale.

This article was written by Adam Button at www.forexlive.com.

Go to Forexlive

Cash funds continuing to attract inflows, set for record year – BofA 0 (0)

Cash funds continuing to attract inflows, set for record year – BofA

FULL STORY

Global investors continued to pour money into cash funds in the week to Wednesday, as higher yields on short-dated debt put cash funds course for record inflows this year, according to Bank of America and data provider EPFR.

BofA’s weekly ‚Flow Show‘ report showed cash funds attracted $77.7 billion of inflows in the week to Nov. 8, putting them on track to see around $1.4 trillion of inflows in 2023.

This article was written by Ryan Paisey at www.forexlive.com.

Go to Forexlive

Italian economy likely to slow in next few months 0 (0)

Italian economy likely to slow in next few months – stats bureau

FULL STORY

The Italian economy is likely to slow further in the next few months after stagnating in the third quarter, national statistics bureau ISTAT said on Friday.

In its monthly economic bulletin ISTAT noted that consumer confidence fell for a fourth month running in October, while business morale also dropped in all sectors barring construction.

The data „suggests the Italian economy could slow down in coming months,“ ISTAT said.

*Italian gross domestic product was flat in the third quarter compared with the previous three months, a preliminary ISTAT estimate showed last week, following a 0.4% contraction between April and June.

This article was written by Ryan Paisey at www.forexlive.com.

Go to Forexlive

Futures mixed after Powell’s hawkish tone; more data awaited 0 (0)

Futures mixed after Powell’s hawkish tone; more data awaited

FULL STORY

Wall Street futures were mixed on Friday after Federal Reserve Chair Jerome Powell’s hawkish tone dampened hopes of an end to rate hikes, with investors now looking forward to next week’s economic reports for more cues on the monetary policy path.

Powell on Thursday said central bank officials „are not confident“ that interest rates are yet high enough to finish the battle with inflation and would not hesitate to tighten policy further if needed.

The hawkish comments sent U.S. Treasury yields surging and ended a strong run of gains on Wall Street which had been driven by expectations that the Fed was done with its hiking cycle after the central bank kept rates unchanged at its last meeting.

The S&P 500 and the Nasdaq snapped their longest winning streak in two years in the previous session.

This article was written by Ryan Paisey at www.forexlive.com.

Go to Forexlive