The calendar is light to start the week

Some Canada data and Empire state manufacturing index to be released


  • Canada manufacturing sales (est. -3.0% versus a 0.5% last month), and
  • wholesale sales (est 1.1% versus 0.3% last month) will be released at 8:30 AM.
  • In the US the Empire State manufacturing index will also be released at 8:30 a.m. ET with expectations up 22.1 versus 19.8 last month.

There are no scheduled Fed speakers on the docket today.

Deutsche Bank CEO calls on central banks to fight inflation

Deutsche Bank CEO, Christian Sewing, remarks at a banking conference

He says that:

“I think monetary policy must take countermeasures here, and sooner rather than later. The supposed panacea of recent years – low interest rates with seemingly stable prices – has lost its effect, and now we are struggling with the side effects.”

Adding that he does not share the opinion that inflation increases are going to be temporary.

Dollar bulls take five to kick start the week

The dollar gains from last week is cooling off a little

It was partly the case on Friday already and we’re seeing that extend to today with Treasuries also looking more bid as yields back away from the post-CPI highs as well.
The greenback is little changed across the board, but sitting slightly lower against the commodity currencies with USD/CAD building on the retreat from 1.2600 on Friday to 1.2525 currently while AUD/USD is up 0.3% to 0.7355.
The latter is working its way back towards a test of its 100-day moving average @ 0.7365 and that will be a key technical level to eye to start the week:
AUD/USD D1 15-11
The near-term chart also shows the 200-hour moving average nearby @ 0.7376 so that might offer some added resistance as sellers look to keep the downside momentum going.
Elsewhere, the dollar isn’t showing much poise with USD/JPY sticky around 113.90 while GBP/USD pared its early advance from 1.3440 to 1.3410-20 levels now.
Meanwhile, EUR/USD is barely changed and still keeping near its lowest levels since July last year with little firm support seen on the charts:
EUR/USD D1 15-11

Treasury yields cool off after jump higher last week

10-year Treasury yields down over 3 bps to 1.55%


The big leap to the upside came after the hot US CPI data but we are seeing the market not get too carried away – at least for now – as yields retreat slightly today.
10-year yields are down over 3 bps to 1.55% while 2-year yields are down by 1.5 bps to 0.505% as we look towards European morning trade.
Fedspeak will be the main thing to watch this week, as the market will poke and prod for clues on sentiment after the inflation figures last week.
That said, don’t expect all too much from Fed officials in the days ahead. I shared some thoughts last Wednesday before the US CPI data release:


China warns of a ‘heavy attack’ if Australian forces came to the defence of Taiwan

Editor-in-chief Hu Xijin of Chinese tabloid The Global Times on Saturday is a mouthpiece of the Chinese authorities:

He tweeted:
  • ‘If Australian troops come to fight in the Taiwan Straits, it is unimaginable that China won’t carry out a heavy attack on them and the Australian military facilities that support them’
  • ‘So Australia (had) better be prepared to sacrifice for Taiwan island and the US.’
Late last week the Australian Defence Minister Peter Dutton hinted Australian troops would join US allies if Taiwan was attacked by China.
Hu Xijin is not backing down, this from a few minutes ago on Twitter:
Editor-in-chief Hu Xijin of Chinese tabloid The Global Times on Saturday is a mouthpiece of the Chinese authorities:
Tensions between the US and China over Taiwian come and go. At present they seem o be escalating but China is a ways off invading Taiwan, thankfully.

The new Beijing Stock Exchange opened for trade today

The Beijing Stock Exchange is focused on SMEs and is a complement to the country’s two main bourses in Shanghai and Shenzhen.

It was an active opening session.
  • Stocks will not be allowed to rise or fall more than 30% in a single trading day
  • But for the first day this rule was relaxed.
  • Reports are that on Monday, 10 newly-listed companies triggered temporary suspensions when their shares surged more than 60%

Japan Q3 preliminary GDP -0.8% q/q (expected -0.2%)

Japanese third quarter growth data

Q3 GDP (preliminary):

  •  -0.8% q/q vs. expected -0.2% q/q, prior 0.5%
  •  -3.0% y/y vs. expected -0.8% y/y, prior 1.9%
  • GDP deflator (an inflation indication) -1.1% y/y. Falling 3 quarters in a row now.
  • Private consumption -1.1% q/q  vs expected at -0.5% and prior at +0.9%
  • Business spending (Capex) -3.8% q/q    vs. expected -0.8% and prior +2.2%

Exports -2.1% q/q, the first fall in 5 quarters

Graph does not include today’s data yet, but its back under the zero line for a contraction:
japan gdp q3 2021Comments from a Japanese data spokesman says declines in autos, household electronics consumption dragged down private demand. Auto, constructions, production were contributors to the capex decline.
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