Archives of “August 2020” month

rss

China reaffirms that US’ TikTok ban has nothing to do with national security

  
  Analysis
#  #  #  #  #  #  #  #  #  #

Comments by the Chinese foreign ministry

US China
  • Beijing has been ‘consistent’ on trade deal
  • Declines to comment on further trade specifics
  • Says position on US sanctions is clear and consistent
  • Says US sanctions are irrational, groundless
  • Reiterates opposition towards ties between US and Taiwan
There’s nothing really new here as this has been China’s stance all along but it does reaffirm expectations that both sides have a lot more than just the Phase One trade deal to discuss if they were to meet later this week.

UK’s Sunak: There will be many more job losses in the coming months

  
Analysis, Economy

Comments by UK finance minister, Rishi Sunak, on the latest GDP report

  • UK economy is now in ‘hard times’, the figures today confirm that
  • Hundreds of thousands of people have already lost their jobs
  • Sadly, many more will in the coming months
The June monthly report was better-than-expected but it mainly just reaffirms sentiment that the economy is picking up further amid the easing of lockdown restrictions.
But as mentioned before, the government furlough program is still masking a lot of the underlying weakness in the economy for the time being.
As such, the outlook – especially in the latter stages of Q3 and Q4 – remains uncertain as there may be a bigger hit to the labour market, in turn the economy, moving forward.
Cable is now up to 1.3050 from around 1.3030 prior to the release of the figures but I don’t see this as being a material game changer for the pound. The dollar side of the equation still holds all the cards in trading at the moment.

Nikkei 225 closes higher by 0.41% at 22,843.96

  
Analysis, Global Indices

A mixed session for Asian equities but mostly lower

Nikkei 12-08
The decline in tech stocks in the US overnight is weighing on sentiment today, though Japanese exporter stocks are benefiting from a weaker yen. Chinese equities are the ones leading losses today, with the Shanghai Composite seen down 1.7% currently.

 

The rout in precious metals is also part of the reason weighing on the risk mood with stimulus talks in Congress facing yet another stalemate.
In the currencies space, the dollar is keeping firmer as such with EUR/USD down to 1.1720 and AUD/USD weighed lower at 0.7110-20 levels at the moment.

HK press – Chinese military told not to fire first shot in stand-off with US forces

  
  Analysis

A report overnight in the South China Morning Post that China’s military forces have been ordered not to fire first in confrontations with the US ….   is good news … I guess:

Says the Post:
  • Sources say that troops have been given orders not to escalate situation as both sides step up their activities in the disputed waters
  • Beijing said to be keen to cool the ‘tense and dangerous situation’ and agreed to a conversation between defence ministers after initially snubbing the request
Link to the Post is here for more, may be gated
Let’s hope a mistake is not made.
A report overnight in the South China Morning Post that China's military forces have been ordered not to fire first in confrontations with the US ….   is good news … I guess:

Dow, S&P 500 see 7-day winning streaks

  
Analysis, US Market

The Dow Jones Industrial Average US:DJIA finished with a loss of 104.53 points or 0.4%, at 27,686.91. The blue-chip gauge was up more than 300 points at its session high. The S&P 500 US:SPX ended 26.78 points lower, a loss of 0.8%, at 3,333.69. The Dow and the S&P 500 both snapped seven-day winning streaks. The tech-heavy Nasdaq Composite US:COMP dropped 185.53 points, or 1.7%, closing at 10,782.82.

The Russell 2000 index US:RUT of small-capitalization companies gave up 9.57 points, or 0.6%, ending at 1,575.10.

Are climbing bond yields about supply or demand?

  
  Analysis
#  #  #  #  #  #  #  #

US Treasury yields climb ahead of auctions

US Treasury yields climb ahead of auctions
It’s a big week in the Treasury market with record-high sales starting with three-year notes today.
With that, Treasury yields have jumped higher. US 10-year notes are up 6.4 bps to 0.6415% today. That’s after hitting a low of 0.5036% last week. The turn in the market came on the refunding announcement as coupon-issues were upsized and now we’re left to ponder what the latest move means.
The optimistic take is that this signals improvement on the virus and the economy. The other side of the argument is that a flood of bonds is going to push up rates.
I’m more sympathetic to the optimistic side, if only because Trump’s executive orders mean that more stimulus spending is less likely and will probably be lower. At the same time, a capital gains cut would blow another hole in the budget.
What does it mean for the US dollar? It’s positive.
BMO today highlights that even at 0.16%, US three-year notes are relatively attractive.
While the past few sessions’ concession will aid the takedown of this afternoon’s offering, at just 16 bp, 3-year yields are not abundantly cheap on an outright basis. However, when compared to overseas yields that have pushed to extremely negative territory, there is an argument to be made that the still-positive nominal rate on Treasuries will increasingly drive foreign interest.
At the same time, they see this latest move as more about supply than a ‘fundamental rethink’ of the econoy.
So the overall message from bonds right now is murky and it’s risky to take any big signals in mid-August.

European shares end the session with solid gains

  
Analysis, Global Indices
#  #  #  #  #  #  #

Major indices up sharply

The flow funds into the European markets continue today with sharp moves to the upside in the major indices. A look at the provisional closes are showing:

  • German DAX, +2.1%
  • France’s CAC, +2.4%
  • UK’s FTSE 100,
  • Spain’s Ibex +2.8%
  • Italy’s FTSE MIB, +2.8%
For the year, the European shares are still down sharply:
  • German Dax -2.2%
  • France’s CAC, -15.9%
  • UKs FTSE -18.4%
  • Spain’s Ibex, -24%
  • Italy’s FTSE MIB, -14.05%
Go to top