Archives of “October 2019” month

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The bond market isn’t feeling too upbeat on trade talks

  
  Analysis
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Treasury yields fall across the curve to session lows

USGG10YR

10-year yields are down by 2.5 bps to 1.644% as yields slip across the curve to start the European morning. While equities are holding higher, the bond market is sending a different signal with regards to positioning ahead of the trade talks outcome.
Essentially, this is what is holding yen pairs back from moving higher on the day with USD/JPY still seen near flat levels at 108.00.
Markets are mixed and a bit paralysed at the moment as everyone is just waiting to see what happens to talks in Washington later today. I reckon that will remain the case ahead of North American trading before we get more trade headlines to work with.

Economic data coming up in the European session

  
  Analysis

ata to continue to play second fiddle to trade talks and Brexit headlines

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Happy Friday, everyone! Hope you’re all doing well as we look to get things going in the session ahead. It’s been a calmer start to the day as markets are holding out optimism on trade talks in Washington and that has been the main theme playing out so far.

However, the pound was the standout performer in overnight trading after Brexit talks between UK PM Johnson and Irish PM Varadkar overshadowed the main focus of US-China trade talks. Cable holds above 1.2400 still on optimism of a watered-down Brexit deal.
Needless to say, I still reserve some skepticism over the matter because if this is what it boils down to, then why didn’t they just get on with it during Theresa May’s tenure rather than waste everyone’s time for the past year or so?
Looking ahead, it’s still all about the mood surrounding trade talks as Trump will be meeting with Liu He later on in the day. As such, trade headlines will continue to be the key factor driving trading sentiment as we look to wrap up the week.
0600 GMT – Germany September final CPI figures
The preliminary report can be found here. As this is the final release, it isn’t going to offer much of anything new unless the figures deviate substantially from initial estimates.
0700 GMT – Spain September final CPI figures
Much like the above, as this is the final release, it isn’t going to offer much of anything new unless the figures deviate substantially from initial estimates.
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading!

BREAKING : Explosion reported in an Iranian tanker near Jeddah

  
  Analysis
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ISNA reports, via Reuters

The headlines say that there has been an explosion in a tanker that has set the vessel (owned by the National Iranian Oil Company) on fire near the Saudi port city of Jeddah.

The explosion is said to have caused heavy damages to the vessel and oil is spilling into the Red Sea. The media outlet is still saying that the event is under investigation but “experts” say that it may be a terrorist attack.
Just one to keep an eye on for oil in case things escalate any further or if there is more to the story above.

Here is what a US-China ‘currency pact’ would mean for the dollar and the yuan

  
  Analysis
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Morgan Stanley (this via Bloomberg) say a pact is likely to weaken the USD and strengthen the Chinese yuan.

Well, yeah.
More:
  • could lead to broad based USD weakness, especially benefitting China-proxy currencies
  • yield curves would get steeper
  • yen would weaken
MS say it’d be a ‘Plaza Accord’ lite.
A bit of a summary if its of interest.

US stocks close higher but off session highs

  
Analysis, US Market

Hopes for progress on US/China

Secretary of the Treasury Mnuchin has left the trade meetings without saying anything to the press.  Pres. Trump is to meet with China vice premier on Friday.  Who knows how the cards fall but the major indices traded with confidence today. Hopes for a Brexit solution (or at least some progress with UK and Ireland) may have also contributed to a better tone.
The final numbers are showing:
  • The S&P index rose 18.73 points or 0.64% at 2938.13
  • The NASDAQ index rose 47.038 points or 0.60% at 7950.78
  • The Dow rose 150.66 points or 0.57% at 26496.62.
The percentage high, low and close for the major indices in North America and Europe are shown in the chart below:
Hopes for progress on US/China

US auctions off 30 year bond at 2.170% vs WI level of 2.169%

  
  Analysis
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US auctions off $16 billion of 30 year bonds

  • High yield 2.17% versus WI of 2.169%
  • Bid to cover 2.25x vs six-month average of 2.23x
  • Dealers took 22.94%. vs six-month average of 27.3%
  • Directs 18.5% vs six-month average of 18.8%
  • Indirects 58.5% vs six-month average of 67.2%
the US treasury completed its refunding by selling 16 billion of 30 year bonds at a high yield of 2.17%. That was slightly above the 2.169% level at the auction time. The bid to cover was near the six-month average. Dealers took a lower percentage than the average at 22.94% suggesting a distribution of the auction to nondealer participants.
Give the auction the C+ to B-

European shares ended the session higher on the day

  
Analysis, Global Indices

US stocks keep gains and trade near highs

the European major indices ended the session today with gains, with France’s CAC and Spain’s Ibex having the largest gains (around 1.25%). THe UK FTSE laggged at 0.28%.

Meanwhile US shares remain higher but below their peaks. All 3 indices were up about 1% at the highs. They are currently between up 0.82% (for the Dow) and 0.88% (for the Nasdaq).
US stocks keep gains and trade near highs_In the European debt market, yields have soared higher with the UK yield up the most at 12.8 basis points on hopes for a successful Brexit deal. The German yield is up 7.9 basis points. France’s yields are up 7.6 basis points.
European yields are soaring higher in trading today
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