Weekly Chartbook
Sovereign risk isn’t likely to impact US rates. Oil markets are trading defensively. Inflation drivers have shifted. Retail sales remain far above pre-pandemic trend levels. China’s property bubble is still deflating.
CNY
US data in the spotlight
• Positive sentiment. US equities rose sharply on Friday, while oil & bond yields ticked up. USD consolidated. AUD stabilised after a torrid few days.• RBA projections. RBA revised up its growth outlook. It is also forecasting a slower return by inflation to target. Risk of another rate hike remains.• Event radar. Offshore, US CPI, US retail sales & the China activity data are released this week. Locally, Q3 wages & the monthly jobs report are due. In contrast to the softness during Friday’s Asian and European sessions, risk appetite was positive in US trade. US equities rose sharply with...
Oil slick
• Mixed markets. Equities ticked up with the S&P500 enjoying its 8th straight gain. USD index consolidated, but commodity currencies like the AUD slipped back.• Bonds & oil. The slide in long-end bond yields & oil continued. US 10yr yields are now ~50bps below the late-October peak. Oil is at a multi-month low.• AUD stumble. AUD has given back ~1/2 its recent rebound. Domestic wage & jobs data released next week could see AU rate expectations rebound. With not too much economic news most markets have consolidated over the past day. Equities have generally ticked up with the major European...
All talk, no action in markets
The dollar is staging a modest rebound after a cast of hawkish Fed speakers worked to put the rate cut genie back in the bottle yesterday. In a series of appearances, Bowman, Goolsbee and Logan all noted that inflation remained too high and the labour market was still healthy by pre-pandemic standards, and Neel Kashkari told Bloomberg there’d been “no discussion” of lowering interest rates among policymakers. Bets on at least four quarter-point cuts by early 2025 slipped slightly through the session, and Treasury yields retraced some of their gains. More Fedspeak is in the offing today: Traders are expecting...
Trade whack-a-mole
Based on this morning’s data from the Census Bureau, one could be forgiven for imagining that the trade tariffs implemented under the Trump administration – and kept largely intact under Biden – are working. The US goods deficit in the first nine months of the year shrank relative to the same period in 2022. And although Mexico’s share of US merchandise imports dipped slightly relative to China’s in September, it remained well ahead on a 12-month rolling average basis. Calls to eliminate trade deficits by applying across-the-board 10-percent tariffs – growing louder on the campaign trail ahead of the 2024...