- USD (USDIndex 93.45) slipped on Q3 GDP miss & ECB ending PEPP in March but neither ruling out nor confirming rate hikes. Yields remains main driver of sentiment as spreads remain at March 2020 lows. Stocks hit record highs before surprise misses from APPL & AMZN, FB re-branded to META “Meta is moving beyond 2D screens toward immersive experiences like augmented and virtual reality to help build the next evolution in social technology”, & Biden pushed hard for $1.75trn budget plan. Today also week & month end.
- Evergrande – paid another bond dollar coupon (on default day).
- US Yields (10yr closed at 1.568) lifted in Asian now 1.61%.
- Equities – new ATH for USA500 -44 (+0.98%) at 4596 (Nasdaq +1.39%) – Big movers – CAT +4.00%, TSLA +3.78%, APPL+2.5% (then fell -3.4% after hours) – USA500.F back to 4566. Asian equities very mixed.
- USOil up from lows yesterday at $79.40 (again) to $81.40.
- Gold another volatile day (1810-1792) cannot hold $1800 and trades at $1794 now.
- FX markets largely flat at month end – EURUSD rallied post ECB to 1.1692 now at 1.1665, Cable capped by 1.3800 trades at 1.3785, USDJPY 113.60.
Overnight Signs RBA is ditching attempt at yield control, stronger data from AUD (PPI, Retail Sales) & weak data from JPY (Ind. Prod, Consumer Confidence, Housing Starts). Big beat for French GDP (+3.0% vs 2.2% & 1.1% last time) & CPI a tick stronger.
European Open – – December 10-yr Bund future has lost 61 ticks in early trade, Treasury futures also under pressure. Tapering speculation is back with a vengeance. ECB yesterday confirmed PEPP will end on time in March next year, now has until December to make up its mind. BoE meets next week & chief economist Pill (big Hawk) confirmed that it will be a “live” meeting, which means possibility of a rate hike will be discussed at least. Stocks hit as yields spike higher, DAX & FTSE 100 futures currently down -0.45 and -0.2% respectively.
Today – German GDP, EZ CPI, US PCE Price Index,Chicago PMI, Canadian GDP Earnings: BNP Paribas, Daimler, Danske Bank, Eni, EssilorLuxottica, Safran, Signify, Swiss Re; Exxon, Chevron, Phillips 66, AbbVie, Colgate-Palmolive.
Biggest FX Mover @ (06:30 GMT) EURUSD (+0.19%) EUR giving up some of the post ECB bid. Faster MAs rolling over lower, 21Hr being tested, MACD signal line & histogram colling but still positive, RSI 54 and neutral. H1 ATR 0.0007, Daily ATR 0.0051.
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Stuart Cowell
Head Market Analyst
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