Archives of “September 2019” month

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Nikkei 225 closes higher by 0.06% at 22,001.32

  
Analysis, Global Indices
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Tokyo’s main index returns from the long weekend to finish near flat levels today

Nikkei 17-09

It’s a bit of a mixed bag in Asia as Japanese stocks are playing catch up to the events in Saudi Arabia so we’re seeing O&G stocks do the heavy-lifting in Tokyo, offsetting geopolitical tensions that are weighing on risk sentiment elsewhere.

Meanwhile, Hong Kong and Chinese stocks were more pressured due to domestic factors with the city protests still causing some unrest in the former while the latter is dragged down by disappointment that China did not lower its one-year lending rate earlier today.
The Hang Seng is down by 1.5% while the Shanghai Composite is down by 1.7% currently. The risk mood overall remains more cautious but nothing suggestive of major flows as we begin European trading. USD/JPY sits just a tad higher at 108.20 currently.

Update on the Saudi attacks whodunnit – more from 3 unnamed sources

  
  Analysis
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An update on speculation of who it was responsible for the attacks on the Saudi oil facility

This via NBC, citing “three people familiar with the intelligence told NBC News“:
  • American intelligence shows that the attack on a major Saudi oil facility was launched from Iran
  • A congressional source says Democrats familiar with the details do not dispute that the attack was carried out by Iran
  • “This attack had a level of sophistication we have not seen before,” the congressional source said. “You will not see Democrats pushing back on the idea that Iran was behind it.”
What will be Trump’s response? And, does anyone doubt its coming?
Comments welcome.
An update on speculation of who it was responsible for the attacks on the Saudi oil facility

Trump: It is looking like Iran was responsible for attacks on Saudi Arabia

  
Analysis, Politics
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Trump comments to reporters:

  • Says he doesn’t want war with anyone but the US is prepared
  • US has a lot of options but he’s not looking at options yet; the US wants to find out who was responsible
This is going to grab headlines and might boost oil but I’m a bit less enthusiastic. Trump has a fairly strong anti-war bent that’s been one of the few consistent themes in his Presidency. There is certainly some reluctance here from him.

The short-term dollar funding market is feeling the squeeze

  
  Analysis
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The repo market isn’t healthy

The combination of corporate debt issuance and quarterly tax payments resulted in a shortage of dollars today. That pushed the borrowing rate on overnight repos up by 153 basis points to 3.80%.
A similar phenomenon took place last December and caused much hand-wringing (but ultimately little FX movement).
The timing of this move is particularly interesting because it comes ahead of the Fed decision. There will be some focus on the Fed funds effective rate today and whether it rises from the 2.14% level today. The FOMC targets 2.00-2.25% currently and there’s talk that it’s trading at 2.20%.
Today’s move might have sparked some outright USD buying rather than borrowing among corporates and that could be what’s weighing on EUR/USD.
Keep an eye on how it develops tomorrow.
The repo market isn't healthy

Saudi Arabia has already brought 40% of production back on line and rest could be back by month-end

  
Analysis, Crude
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Report from Energy Intelligence

oil 3 day chart
This is less-bullish for oil:
“Industry sources told Energy Intelligence that 40% of the lost production had already been restored by Monday, while one source said national oil company Saudi Aramco expects most of the rest — more than 3 million b/d — to be brought back on line by the end of September.”
More:

“Industry sources said that by Monday a combined 2.3 million b/d of oil production had been brought back on line — 2 million b/d at Abqaiq and 300,000 b/d at Khurais.

Industry sources said Aramco would seek to keep up oil deliveries to its customers by drawing down oil it holds in storage, while also offering crude grade swaps and maximizing output from its offshore fields.”

WTI is up $7.70 to $62.56 — about 80-cents from the highs. Read the full report here.

Global currency trading volumes surge to highest-ever level

  
Analysis, Forex
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Trading hits $6.6 billion per day

Trading hits $6.6 billion per day
Trading in the foreign exchange market has hit $6.6 trillion per day, according to the latest survey from the Bank of International Settlements.
The BIS today reported today that volume in the survey month of April rose 29% compared to 2016. The comprehensive survey is conducted every three years.
Aside from the jump, what stands out was the rise in swaps trading — which is now nearly half the market.
Other key details:
  • 88% of all trades include USD
  • London accounts for 43% of all activity
  • US trading is 17%
  • EM currencies are now 25% of turnover
  • Trading involving the euro hit 32%
  • Trading involving the yen at 17%
  • Yuan trading is 4%
  • Spot FX trading rose 20% to $2 trillion
The changes in volumes of the major currencies was muted compared to 2016 aside from a small drop in the yen but that may have been due to lower volatility in the survey month.
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