Market News

• USD (USDIndex 93.10) Dollar weakened to Wednesday lows (92.94)  post BOE, SNB, Norge Bank, CBRT, weak PMI’s & Claims and Evergrande missing interest payment deadline – AND no comments from the company. US Federal budget – stand-off continues.
• Yields stormed higher overnight (10yr closed higher at 1.336%) jumped 10bps to 1.434% in Asian trades (Highest since March 2020)
• Equities rallied again over 1%, sentiment rises but Evergrande worries persist (HSBC, UBS & Blackrock – exposed to a total of $875m). Total offshore exposure – $20bln of the $300bln. USA500 +53 (+1.21%) at 4448. USA500.F lower at 4433.  Dow +1.48%. NIKE & Costco beat Earnings.  Asian mixed –  Nikkei +2%, China lower. VIX tumbles again to 20.50  
• USOil continues to recover breaches $73.00 – GS talk of $85+ if there is a cold winter.
• Gold dropped to $1737 (31 day low)  has recovered to $1755 now.  

Overnight  – NZD trade balance tanked, JPY CPI and Manu & Services PMI all missed, UK   Consumer Confidence halved (-13 vs -7).

European Open – The December 10-year Bund future is down -24 ticks, alongside broad losses in US futures.  Norway kicked off rate hikes in Europe and the BoE is also inching towards reduced stimulus which together with the Fed’s tapering hints this week seems to have triggered a shift in markets. Stocks weren’t too spooked by the rise in yields yesterday, but uncertainty over Evergrande’s USD coupon payments and lingering concern that China’s property boom could implode and the growth engine running out of steam has seen equity markets turning more cautious once again. The DAX future is currently down -0.1%, the FTSE 100 future little changed.  FX markets flat – Sterling holds up, JPY weaker  – EURUSD at 1.1732 & Cable at 1.3725 USDJPY recovered to 110.50.

Today – German IFO, US New Home Sales, FedSpeak Williams, Mester, Clarida, Powell, George, ECB’s Elderson, BoE’s Tenreyro.

Biggest Mover @ (06:30 GMT) GBPJPY (+0.22%) 3 Rally from summer low at 149.40 continues after Hawkish BOE. spike d to 151.70 earlier.   Faster MA’s aligned higher, MACD signal line and histogram broke 0 line yesterday, RSI 74.50 OB but still rising.  H1 ATR 0.150, Daily ATR 0.695.

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Stuart Cowell

Head Market Analyst

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