Welcome to my daily Markets Musings.
You’ll see things are different from now on. That’s because the full note was approaching 2,000 words some days and I’m breaking it up into a number of reports on the Axi Blog each day now.
That way traders can subscribe to the Axi Blog easily and then cherry pick the yarns and markets of interest
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Market Summary (7.40 am Tuesday, August 14)
It really is all about stocks and US stocks in particular when it comes to true risk off isn’t it?
That’s a message I gave a journo I backgrounded yesterday morning and it’s the clear takeaway as I write this morning after surveying the financial markets landscape one day into the week and after 24 hours of turmoil.
Sure, the Turkish Lira has made an almost full round trip from 7.20 this time yesterday back to 6.40ish (after the CB injected liquidity) and now back at 6.82 for a 7% loss (news of a meeting in Washington has helped in the past hour). But USDJPY at 110.72 is 50 odd pips off the lows, the Nasdaq 100 is just in the red, and the S&P 500 is only down 0.4%.
So, while the Lira has lost 8%, the South African Rand is down 2.4%, and the Mexican Peso is off around 1.24%, we really haven’t seen things kick off the way they could have. Even European stocks didn’t fall too far.
One thing that does stick out though, something that suggests there is still a level of disquiet in markets, is that the Australian dollar is the worst performer of the big currencies with a 0.5% fall to 0.7267. Copper was flat to down a little depending on whether you look at HGc1 or HGc3 ($2.74, -0.36%) but there was some weakness across the base metals complex more broadly. That and the fact the Thomson Reuters CRB index is down 1% and sitting at five-month lows, along with the AUDUSD underperformance, and the VIX increase to 14.73 (up 12%) tells you traders are still concerned.
Not panicked but concerned about growth and the outlook nonetheless. And there is no sign either side of this latest Turkey mess are backing off.
Quickly around the grounds then. As reported the S&P is down 0.40% but it’s had a bearish engulfing day by the looks of my chart. That’s ominous, but 2,795 is still the key downside level that needs to be breached to get too concerned – S&P 500 is at 2,826.
The Dow is down 0.5% to 25,187, the Nasdaq100 is down 0.1% at 7,401 while in Europe the DAX lost only 0.53%, the CAC hardly dipped with a 0.04% and the FTSE 100 was 0.32% lower. That’s left SPI traders with just a small 3-point gain after the 26-point fall on the ASX 200 yesterday.
Back to forex now and the USD index is largely unchanged at 94.34, Euro is back at 1.1400 after trading a 1.1365/1.1433 range. Sterling is at 1.2760, down 0.1% and the Yen has given up most of its gains trading at 110.63 after trading through a 110.15/110.93 range. The Kiwi and CAD are both 0.1% either side of home at 0.6571 and 1.3130 respectively.
Oil has had a wild ride overnight. Both WTI and Brent fell completely out of bed after news of a Cushing build, and OPEC downgrade of 2019 forecasts. But it has bounced solidly of support zones for both these benchmarks such that 2% losses are now just 0.44% for WTI at $67.33 and around 0.1% for Brent which is trading at $72.76.
Bitcoin has had a wild 24 hours too. It’s traded a $6,145/6,544 range but is currently sitting at $6,285 up 1.6%. Gold is under acute pressure and closing in on my $1182 support zone – it’s at $1194, down 1.38%. While US rates retain a bid but have drifted a point or so higher overnight – 2’s are at 2.61% and the 10’s are closing in on 2.88%.
Yesterday’s Chinese loans and money supply data suggested the re-liquification efforts of the PBOC might be gaining some traction. But we’ll get proof or otherwise today with the release of the monthly triple-treat of retail sales, industrial production, and fixed asset investment for July. We’ll also get the NAB business survey out here in Australia and Japanese industrial production in our time zone.
Tonight, it’s German Q2 GDP and July inflation data as well as UK employment and the second read on EU Q2 GDP. The ZEW economic conditions and sentiment is also out for Germany while export and import prices are out in the US before the API crude data tomorrow morning.
Have a good day.
Macro Stuff that affects everyone and everything – either today or eventually
Have a great day's trading.
Chief Market Strategist
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