Bank Notes:

markets, News
Date:
2/21/2020
 
 
 
 
Events Date:
Event
Event Comments
 
Coronavirus
*mkts monitoring if new cases growth rate is consistently slowing
*travel, casino, airline stocks rally will be good measure of mkt view on virus development
 
PMI
*mkts boosted by better than expected PMI numbers
 
Democratic Party election
*Bernie Sanders front runner
 
US China Phase 1 deal
*China to start roll back some tariffs, giving mkts a bid
*US says china phase 1 deal will be impacted by coronavirus
 
India US trade deal?
*India won’t join China backed regional trade agreement
 
Earnings Season
*trades will start factoring in new earnings outlooks to continue bid
Feb
Fed REPO ops update
*mkts think FED will raise IOER to move rates to mid target point
*support expected till Apr 15 tax date
02-Mar
Brexit negotiations
 
year 2021
EU auto tariffs
*truce until year end agreed as EU agrees to delay tech tax
Markets
Ticker
Comments
Macro
 
 
 
 
*IMF cites high corporate debt vulnerable for US and China
*US balance sheet is shrinking, but EU and China balance sheet still growing
*BoC highlights risks monitored <- economy capacity, inflation, wage dynamics, sensitivity to higher rates with elevated debt
*BIS says China, HK, Canada most risk of banking issues
Rates
 
 
 
TSY
*mkts scale back rate cut expectations
*Powell on hold comments didn’t lift rates
*traders closely watch comments of treasury purchase and unwind plans
*FED favouring  shortening balance sheet duration
*FED slowing hikes will avoid inversion repricing
*Fed balance sheet target estimate ~$1700 bb
(Powell: Between USD2,500-3,000bn within three to four years with mainly treasuries on balance sheet: mkts think a bit optimistic)
 
IHY
*central banks tighten, but balance sheet still expending
 
BTP
*Italy comment 2020 budget aim between 2% and 2.1% provide support
Equities
 
 
 
SPX
*hints of QE for equity repricing
*US Congress: traders monitoring hints of gov cooperation going forward
*Trump tweets: mkts pricing out tweets as not always indicative of actual reality
 
FXI
*China ready for stimulus to offset tariffs, not going to stimulate property sector causing property stocks to sell off
FX
 
 
 
TRY
*depreciation pressure as gov intervention viewed as temporary
 
USD
*Mnuchin says no change to U.S. dollar policy as of now, but may in future
*speculation Trump operations  to sell dollar
 
MXN
*working to avoid Pemex downgrade, Pemex debt swap helping bid
*mkts think oil industry reforms not enough to help
 
EUR
*EUR inflation not expected to last
*ECB comments on options to help weak banking sector
*Trump could challenge trade as EUR devalues
*no solid bid expected until negative rates lifted
 
GBP
*slight bid as GDP meets expectations
 
AUD
*drop with rate cut, employment data to deteremine further cuts
 
CNY
*most likely move back to within 6 range after trade deal
*CNY becoming petro ccy will faciliate CNY global use
*gains signal China goodwill on trade deal
 
CAD
*mkts start to price in cut, failed to bid on oil rally
Commodity
 
 
 
USO
*bid mainly due to Rosneft sanctions and Libya conflict
Credit
 
 
 
RATINGS (RATC)
*Ireland upgraded to AA- by S&P
*S&P upgraded Spain to A
*Fitch negative outlook on Chinese banks
 
 
 
COT Flows
CAD, USO
*bids unwind
 
HG
*copper shorts accumulate
 
 
 
 
 
 
Central Banks
Announcement Date
Comments
FOMC
19-Feb-20
*FOMC minutes, mkts gauging cut intensions
*unch as expected, dot plots show no cuts for 2020
*US China negotiations maybe key if further cuts
*mkts unwinding futher rate cut expectations
BoC
 
*unch as expected, slight dovish forward looking estimate
*fwd guidance hint direction can be either way
*bond mkts start to price in cuts as next move, traders think maybe overreaction
RBZ
 
*on hold expected
RBA
 
*RBA holds as expected
*mkts expect cut if US China trade deal breakdown
*indicate QE will only be considered when policy rate has been lowered to .25%
ECB
 
*leaking of virus insurance cut by media
*QE may lossen ISIN limit restrictions in future
*Germany 50bb fiscal package, but not immediately
*cut as primary stimulus measure comments
BoE
 
*unchg as expected
*25 bps cut priced in for 2020
BoJ
 
*unch as expected
*CB targeting low interest rates until 2020
 
 
 
Mkt News:
 
 
Norway wealth fund plans to remove emerging corporate bonds and linkers from investment, and sell off energy investments
China fintechs granted banking licences in Hong Kong, with eyes on New York and London
Antitrust probe on big tech
 
Brazil state owned banks have poetntial heavy losses from construction conglomerate scandal
China take over of Baoshang bank hs caused liquidity strain for bigger Chinese banks who are now more risk averse
IMF chief replacement: Jeroen Dijsselbloem, Kristalina Georgieva, or Olli Rehn <- Kristalina front runner
MS buy E-trade
 
 
chatter Microsoft interested to buy Bloomberg


 
 
 
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