Axi | Mar 14, 2018 09:44
Originally published by AxiTrader
Welcome to my daily Markets Musings.
You’ll have already noticed that I’m writing a little more above the line these days and less in the “Here’s What I Picked Up Section” – that’s because feedback from some readers is they are time poor and would like a bit more in the elevator bit – what went up what went down – because they find the whole note daunting.
I’d love to hear what you reckon so as always, feedback iswelcome
Greg
h2 Market Summary (7.45am)/h2It’s clear Donald Trump is and always has been his own man. What’s also clear is that he wants those around him to do as he bids. He has a vision of the world that has been reinforced in its correctness by the fact he’s been successful in business, won the presidency, and gotten North Korea to the negotiating table – among other things.
It’s the vision, born of these successes, that President Trump seems to also believe will bring Iran, China, and maybe even the EU to heel.
So this morning the news is that Secretary of State Rex Tillerson is out, to be replaced by the hawkish CIA boss Mike Pompeo. Tariffs, to rein in China’s aggressive IP infringements, are on the way in it seems. And Iran and Russia might take more than a passing interest in the new Secretary of State.
Geopolitics folks.
Stocks and bonds are cautious of both events with Europe equites closing down on the Tillerson news. The DAX lost 1.59%, the FTSE 1.05% and in New York the S&P 500 fell 0.63% while the Dow is down a similar amount and the Nasdaq lost around 1.19%.
Naturally after a fall yesterday on the ASX SPI futures traders have lopped another 34 points off the March contract to 5,934.
Bonds are lower though with the benign US CPI , 0.2% and 2.2% headline yoy, and clear tilt toward increased geopolitical risks putting a bid tone into the market. 10's are at 2.84%, the 2's at 2.26% so the curve is flatter again now at 58 points. The big 30-year auction went off well also underlying the better bid tone in bonds.
Gold has also caught a bit of a bid and while it’s only $5 an ounce to $1327 it is around $11 off the overnight low.
As goes gold and bonds on days like these so goes the yen which was trading, in US dollar terms, up near my stop overnight making a high of 107.28ish before USD/JPY fell back to 106.49 this morning. Likewise the Australian dollar peaked at 0.7897ish overnight but lost ground and is at 0.7847 as I write.
Elsewhere in currencies the Tillerson news and the not scary CPI hit the US dollar which is at 89.69 in US Dollar Index terms as the euro has caught a bid as well and is up at 1.2388. The pound is stronger as at 1.3963 – both have gained a little under half a percent against the US dollar. The Canadian dollar has been absolutely belted after BoC governor said he doesn’t know when rates will go up again – buy stops have been going off this morning in USD/CAD which is at 1.2971 up 1.06%.
Elsewhere the concerns over shale oil production are starting to grow louder. WTI and Brent are lower as a result and looking rather wobbly now on the charts. WTI is off 1.32% and Brent is 0.72% lower. Copper managed to buck the trend though with a 0.4% gain amid what was a down day for base metals.
On the day it’s Westpac consumer sentiment as the key thing I’m focussed at domestically. Of note I’ll be looking at the unemployment expectations index to see if it mirrors the amazing leap higher in employment intentions the NAB’s business survey showed.
Of course the triple treat of Chinese data – retail sales, industrial production, and urban investment, will be important as will the minutes to the latest BoJ meeting. Tonight’s German inflation will be watched closely as will speeches from ECB boss Mario Draghi, his deputy Vito Constancio and his chief economist Peter Praet. EU employment and industrial production along with US PPI data will also be worth watching.
h2 Here's What I Picked Up (with a little more detail and a few charts)/h2 h2 International/h2
h2 Commodities/h2
Have a great day's trading.
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