Morning Notes:

Commentary
Date: 2/14/2020  
     
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
  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
14-Feb Canada Bond Mkt *1pm early close, happy V Day and Family Day
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
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 *gs thinks oil will rebound, traders will eye economic data to confirm
*iran conflict cause oil bid
*US supply more than offset Iran output, ample US supply will cap price gains in foreseeable future
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   *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 12-Feb-20 *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
GS planning to buy E-trade or a bank  
chatter Microsoft interested to buy Bloomberg  
China tech stocks down as gov allocate less to tech investments

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