Market Update – September 27 – Yields, Evergrande & Oil
- USD (USDIndex 93.25) weakened on open but holds as reflation trade gains momentum. Scholz (current Fin. Min. & leader of the opposition SDP) likely to be next German Chancellor, (overall EUR positive). BOJ Mins “will not hesitate to add to easing policy”.
- Yields hold at recent highs (10yr closed 1.46% from 1.48% high) Now at 1.447% in Asian trades (highest since March 2020)
- Equities rallied but closed flat, Evergrande worries persist (HSBC, UBS & Blackrock – exposed to a total of $875m). Total offshore exposure – $20bln of the $300bln. USA500 +6.5 (+0.15%) at 4455 & over a key technical level. USA500.F higher at 4468. Asian equities higher, ASX leads at +0.6%. VIX closed below 20.00 Friday – trades at 19.32 now.
- USOil rally continues (October 2018 highs) +1.0% today & gapped at open, catalyst – Supply disruptions & inventory drawdowns – $74.88 – GS raised year end target to $87, higher, if there is a cold winter.
- Gold up from Friday lows, $1740 (touched $1760) to $1755 now.
- FX markets USD bid – CHF & JPY weaker – EURUSD – 1.1715, Cable 1.3660, USDJPY 110.70.
Week Ahead – Month & Quarter end, US Senate vote on Infra & Fiscal budget, 2nd Evergrande interest payment ($49.5m), Japan to have new PM Wednesday. Dozens of Central bankers on podiums worldwide.
European Open – December 10-yr Bund future up 27 ticks, DAX & FTSE 100 futures up 0.6% & 0.7% respectively, suggesting Friday’s bout of risk aversion is abating, although China risk & surge in energy prices will remain in focus.
In Europe investors will try to assess the impact of yesterday’s election in Germany, which signalled the end of the Merkel era & brought a shift in the balance of power, but no outright majority, which means the country is now facing a period of uncertainty while party leaders try to hammer out a coalition agreement. With the Left Party failing to clear the 5% hurdle though the threat of a participation of the party in government has been avoided, which may be enough to boost confidence today & EUR in the longer term.
Today – US Durable Goods, ECB’s Lagarde, Panetta, Fed’s Evans, Williams, Brainard, BoE’s Bailey, 2yr & 5yr US supply.
Biggest Mover @ (06:30 GMT) CADCHF (+0.58%) 4-day rally from September low at 71.80 last Tuesday, next resistance 0.7350 & 0.7375. Faster MAs aligned higher, MACD signal line & histogram rallying higher, RSI 71.00 OB but still rising. H1 ATR 0.00095, Daily ATR 0.0064.
Click here to access our Economic Calendar
Head Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
Comments are closed