- USD (USDIndex 94.86) spiked to 94.96 (July 2020 high). US Inflation at 30-yr high – USD & Gold rocket, Yields rise and stocks sink. Weekly Claims in-line at pandemic lows. Musk has sold $5bln of #TSLA stock this week, (3% of the 10%) TSLA closed +4.34% yesterday. US & China agree surprise pact at COP26, Biden has a plan to “reduce high energy costs”. Overnight – AUD jobs & GBP GDP both missed & UK Industrial & manu. data also weak.
- Evergrande $148m interest payment was PAID – avoiding immediate default. Next payment due December 28 – $255m. They have total debts of $300bln ($19bln due outside of China).
- US Yields (10yr rallied to close up at 1.56%, a 7-week high, from the a 6-week low at 1.4150 Tuesday. Treasury markets closed today for Veterans Day.
- Equities down in worse day in a month. USA500 -38.5 (-0.82%) at 4646 – Big movers; TSLA +4.34%, PFE +3.64%, Ford -3.78% GOOGL -2.03%. Disney missed (DIS+ subscriptions & Theme parks) – 4.5% after hours. USA500.F trades lower at 4650. Asian equities weaker (ASX worst – Nikkei actually +ve on weak JPY) .
- USOil – off 7-year highs on Biden’s comments – Inventories – a smaller build than expected 1.0 m vs 1.6m & 3.3m last week – USOil fell to 79.50. Trades at $80.00 now.
- Gold recovers further testing as high as $1870 yesterday (5-mth high) as Inflation hedge trade builds, back to $1856 now.
- FX markets – EURUSD down to 1.1470, USDJPY back over 114.00, & Cable back to 1.3385. AUD & NZD at 5-wk low.
European Open – December 10-yr Bund future is down -31 ticks at 170.38; That will leave European markets to continue to digest yesterday’s hot US inflation number & continue to adjust rate hike expectations, which have come back with a vengeance. The spike in bond market volatility over the past month highlights that central bankers need to adjust their communication policy as the rate cycle turns & that repeating the mantra that inflation pressures will be temporary are no longer enough to soothe nerves. DAX & FTSE 100 futures currently down -0.2% and up 0.1% respectively.
Today – OPEC MOMR, ECB’s Lane, Schnabel,- US & CAD Veterans Day (Bond markets & Banks closed).
Biggest FX Mover @ (07:30 GMT) NZDUSD (-0.36%) Collapsed from 0.7100 to 0.7030 so far. Faster MAs aligned lower, MACD signal line & histogram falling & under 0 line, RSI 25 & still falling. H1 ATR 0.0011, Daily ATR 0.0062.
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Stuart Cowell
Head Market Analyst
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