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
Feedback always welcome
Market Summary (7.34am Tuesday August 21)
I was all set for a pretty short sharp summary this morning but President Trump has put paid to that.
Overnight rumours swirled that he’d criticised the Fed for raising rates at a fund raiser. That saw the US dollar come under a little pressure and US bond rates rally with the 2’sat 2.59% and the 10’s down 5 points to 2.82% and at the start of what could be a monster short squeeze.
That puts the curve at 23 points for those playing recession watch at home.
That President Trump’s comments have now been confirmed in a conversation with Reuters hasn’t done any further damage to the Greenback nor caused bonds to rally (rates down) further. But we can’t be too far away from a few tweets on the topic.
Anyway, the result is that the US dollar, in index terms, is down about 0.35% at 95.75 while the Euro is up a similar amount at 1.1486. That the Fed’s Raphael Bostic said one more hike and he’s watching the curve added a little bit to the USD move but the President was the key. GBPUSD is up about 0.3% as well as it closes in on 1.28 again – it’s at 1.2795 this morning.
On the commodity bloc the recovery in copper, rally in oil, and improvement in the CRB didn’t really help. The Aussie dollar is just marching in step with the Euro still with a 0.35% gain to 0.7341. The Kiwi missed the memo and is largely unchanged at 0.6644 while the CAD only gained 0.1% with USDCAD at 1.3035.
EM currencies are mixed. The Turkish lira lost about 1% with USDTRY at 6.07, but it’s bouncing around a little. The Brazilian real has lost 1.14%, but the South African rand is 0.6% better bid. USDCNH is flat at 6.8359. Let’s see where things go today now that President Trump has apparently also said he doesn’t expect much from the trade talks with China this week.
To stocks then and the S&P pulled back from the highs to finish at 2,857 for a 0.24% gain. It’s another one of those troubling candles like we saw a few weeks back at the recent high around 2,863. Obviously wee need to see the recent highs taken out for things to kick on. The Dow finished up 0.35% at 25,788 while the Nasdaq was 0.1% lower at 7,371. That the President also said Facebook and Twitter regulating themselves is vry dangerous might be something to watch in tech.
European stocks did better though as they played a little catch up to the Friday rally in the US. The DAX was 1% higher, the CAC rose 0.65%, the FTSE100 in London was 0.43% higher. SPI traders were more circumspect though subtracting 3 points overnight after a lacklustre day on the ASX yesterday which didn’t live up to the 28 point rally SPI traders were betting on Saturday morning.
Oil is higher despite the announcement the US DoJ is going to release 11 million barrels of oil in time for the Iran sanctions to really bite. So this morning WTI is up 0.8% at $66.43 while Brent is 0.5% higher at $72.17. As noted above copper is higher again with HGc1 up 1.45% to $2.66 a pound. Gold is up half a percent at $1190 while the CRB is up the same amount.
Bitcoin is largely unchanged at $6425.
On the day we get the RBA minutes here in Australia but before that we get another speech from RBA governor Lowe this morning. South Korean PPI is also out this morning along with visitor arrivals in New Zealand and Japanese industry activity. Tonight its very quiet with wholesale sales in Canada and the Redbook in the US.
Have a great 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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