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Intraday Market Thought: Housing Headaches

by Adam Button | Aug 24, 2018 11:19
The world's largest asset market isn't the bond market, it's housing....As the Australian dollar lagged once again on Thursday, we take a closer look....US durable goods orders are up next...The US economy is strong...In Tuesday's FOMC minutes, most participants saw growth running above 3%....We find it tough to disagree with the strength of the consumer underscored by....Yet Tuesday's existing home sales report was weak at a pace of 5...34m compared to 5...40m expected...That was the fourth straight monthly decline and sales are down 1...5% year-over-year as well...It's not an isolated report...On Thursday it was more of the same with the FHFA house price index at the....New home sales fell to the lowest since October at 627K compared to 645K....Most housing indicators have struggled this year...The likely issue is a mixture of higher interest rates, land-use policy and....Another potential trouble spot is Australia...There are increasing reports of stress near Sydney and Melbourne, especially in....There are waves of interest-only mortgages coming due in the months ahead....Scott Morrison, Australia's Treasurer became the nation's sixth..
Intraday Market Thought: Correction here to stay, DUP Kneecaps May

by Adam Button | Oct 23, 2018 13:45
Stocks resume their selloff, with DOW30 and SPX500 extending falls below their....7% from the September highs...Gold and silver are outperforming all currencies, with the fomer decisively....Cable fell more than a full cent Monday after the DUP said it would support a....Italy's budget awaits final word from the EU and Turkey's Erdogan....The DAX and DOW shorts hit their final targets for 370 and 360 pts gain....New trades will be issued ahead of Friday's highly anticipated US GDP....Euroskeptic parliamentarians are worried that Theresa May could force the UK to....She's stuck between the EU and members of her own party who want a....She made a speech on Monday saying 95% of the deal was done in an effort to....The amendment itself was later dropped but the willingness of the DUP to vote....That uncertainty is what sent cable to the lowest since Oct 4...The Bank of England is seen to be sidelined until the dust clears on a....However he will speak at 1520 GMT in Toronto and his comments could add....Less than 24 hours after Chinese stock markets ripped higher Fri/Mon in their....Fundamental repricing of coprorate earnings and the ascent of bond yields....What's equally notable is how little that upbeat sentiment has spilled over...US equities fell again on Monday and the commodity currencies closed near the....The divergence continues.
Intraday Market Thought: GBP Awaits May's Speech, Risk back off

by Adam Button | Mar 25, 2019 13:59
Global indices are back in the red and GBP pushes near the session high ahead....Optimism resurfaces on chatter about optimism towards a 3rd vote...All currencies are up against USD since the start of the Asian session, except....Gold and silver are at the top...Chicago Fed's Evans said it was understandable to be nervous about the....The Premium short in DOW30 was closed on Friday at 25530 from Tuesday's....Below is a snapshot of the chart & tech rationale for the trade...Over the weekend, reports of a UK Cabinet coup have circulated with May to....Lidington denied the report on Sunday and senior ministers rallied behind May....May can't technically be forced out because she won a leadership challenge....Lidington is staunchly pro-Europe so a change might be positive for the pound....Most likely he would simply be a caretaker PM until Conservatives could....That's something that could stoke a civil war within the party and lead to....The summary of US Special Counsel Robert Mueller's report found that US....Nonetheless, attorney General Barr's summary is inconclusive as to whether....With regards to the inversion of the yield curve: There are various ways to....On Friday, yields on the US 3-month T-bill are below that of the 10-year...It may have only been a momentary blip but other parts of the curve out to 5....Such a move preceded the past 6 US recessions by an average period of 313....The inversion and huge rally in bonds from Wed-Fri belie deep worries about....The S&P 500 fell 54 points to close out the week with the market closing at..
Intraday Market Thought: Why GBP is Year's Best Performer

by Adam Button | Apr 17, 2019 12:33
Commodity currencies finally breath sigh of relief after better than expected....UK CPI held at 1...9% y/y in March, while Eurozone CPI held at 1...4% in the same month...Canada CPI follows next...Let's talk about the UK but not Brexit...And here's a chart of the UK's economic surprise index versus the rest....Currencies focus on flow and expected rate of change...Brexit has absolutely dominated headlines and trading in the pound for....UK unemployment held steady on Tuesday in what was largely a non-event for the....UK earnings growth at 3...5% y/y matched the high from 2008...Later in the day, negative comments from Corbyn about negotiations with May sent....3045...While Brexit headlines will continue to be market movers, we're likely stuck....That means their impact will ebb, flow and likely fade in the days and weeks....Instead, the market will turn its attention to economic data...Today's UK CPI was described to have missed the target, but remains the best....Thursday's retail sales report excluding auto fuel, sales are forecast....3% after a 0...2% rise in February...Some Brexiters may say: "We told you UK economy would do well despite....Overall, UK GDP forecasts for this year have slipped to 1...2% from 1...5% at the start of the year but that's in-line with much of the developed....Some of that is a result of Brexit uncertainty, which has diminished after....The Citi Economic Surprise index at +36 is one of the better global readings so....Given the negativity in GBP and the uncertainty, risks are skewed towards..
Intraday Market Thought: Inflation Upends Central Scenario

by Adam Button | Apr 30, 2019 10:30
An emerging theme of disappointing inflation readings is something to keep....nbsp; USD is down across the board amid month-end rebalancing...US consumer confidence is up next...The Weekly Premium video is posted below for subscribers, containing some....The undeniable theme of the past 10 years in central banking is....It's been nearly universal across developed market regions with rare....The trend appears to be continuing...In Monday's US PCE report, core inflation was 1...55% y/y compared to 1...7% expected with the prior also revised lower...The inflation numbers were also soft in Friday's GDP report...Europe is also struggling with low inflation and another round of data is....For most of the past decade, central bankers have been content to push out....That faith has been shaken, and it's causing a re-think at the Fed and....There is a growing worry that central banks will go into the next recession....That's dragged inflation expectations lower and leaves them....Influential Chicago Fed President Charles Evans is increasingly....The solution may be to allow or engineer above-target inflation for a period...The hope a few months ago was undoubtedly to simply leave rates....Yet, with prices trending lower pressure may galvanize to cut rates...For now, policymakers will continue with patience as stock markets hit fresh....It will be interesting to note how this week's Fed statement adjusts to the....The day ahead features a healthy dose of economic data including US consumer....Canadian scheduled news includes February GDP and Poloz at parliament.
Intraday Market Thought: RBNZ Cuts, VIX Surges, Gold & JPY Firm

by Adam Button | May 8, 2019 12:40
Volatility is back in a big way as the VIX hit 4-month highs but we warn you....NZD lost ground after the RBNZ cut rates...GBP flounders towards 1...30 on eroding hopes that poor local elections results would spur Labour and....Elsewhere, a heavy round of risk aversion hit stock markets, while gold....A new Premium trade was issued yesterday, while the stop was moved in another....تم تنزيل فيديو المشتركين: إدارة الصفقات الحالية...The RBNZ decision to cut by 50 bps interest rates was a surprise as the....NZD plunged from 0...66 to 0...6527 before erasing half of those losses...The RBNZ was surprised by the impact of the global slowdown, but its communique....Brexit Cross Party Talks....The latest reports indicate no progress in Brexit negotiations but more talks....There was a small opportunity this week for a breakthrough but it has evidently....It's increasingly clear that all sides are far too dug-into positions to....US-China Talks & Key Levels....Elsewhere, worries about a US-China trade war hammered equity markets on....The S&P 500 fell as much as 66 points before finishing down 48 points...It came after yesterday's tariff talk from Mnuchin and Lighthizer...The trading pattern continues to be that of aggressive declines in the afternoon....DOW30 closed below its 55-DMA, calling for 2nd confirmation, while SPX remains....We're also closely watching the $60 support in US crude oil as well as the 2...37% support on the US 10-year yield, a break of which could break the 109...80 foundation in USDJPY...What's notable is that the FX and bond markets were much less volatile....Yen crosses fell around 0...5% and Treasury yields were down 1-2 bps...That's an indication of a wait-and-see attitude rather than a flight to....The USDJPY Premium short is currently 120 pips in the green...Every decline in the S&P 500 will sap Trump's will to launch the trade....The focus in the day ahead will continue to be on China's response and..
Intraday Market Thought: Markets Hit by Trump's Mexican Tariff Threat

by Adam Button | May 31, 2019 12:45
Global indices take a sharp leg down after president Trump shifted attention....The selloff began around 3 am London time when Trump threatened Mexico with a....The Mexican peso and oil were the bigggest decliners, as was the loonie...The chart below shows how May's ugly market showing has pushed JPY, CHF and....nbsp; has been The Premium Insights allowed the DAX long to be....A new FX trade was added before yesterday's NY close...nbsp;....The Trump team warned that the 5% tariff would rise to 25% by October 1st if....Just as China was threatening to restrict its rare earths exports, Trump....Today's upcoming release on US PCE is a key test for the US dollar as....More on the PCE below...On the Bank of Canada....A few word on the the notable contrast in speeches between the top deputies at....BoC's Wilkins emphasized upside and downside risks while highlighting that....Fed's Clarida warned that downside risks could call for more accommodative....He also emphasized that inflation has been lower than expected...That was a key takeaway from revisions to Q1 GDP as PCE inflation was cut to 1...0% annualized from 1...3%....That drop led to a bid in bonds that pushed yields 5 bps lower across the....Those levels could be taken out if Friday's April PCE report paints a....The PCE deflator is expected up 1...6% y/y on both core and headline but after GDP, those risks are certainly on....The details in the data will be especially important because the FOMC....The data is out at 1230 GMT, 13:30 London.
Intraday Market Thought: Trump Threatens, UK Shrinks, CAD Jobs Slump, Germany Turns Taps

by Adam Button | Aug 9, 2019 15:33
JPY is back on top and indices falling on fresh Trump comments threatening to....from GBP slumped below 1...21 on UK Q2 GDP falling to -0...2%, showing the first contraction in nearly 7 years (more on this below)....Germany may finally relent to pressure to stimulate the economy as a report....Canadian July jobs fell by a net -24K vs exp -15K and the unemp rate rose to 5...7% from 5...5%, but wages rose 4...from 3...6% complicating matters for the BoC...Indices peaked out at 6pm Eastern on Thursday on White House reports (see how....Premium subscribers look out for a potentially new trade later today if the....Euro is parly stabilizing on soaring EURGBP and on reports that that....The IMF, ECB and others have been badgering the government to spend and....The report said new debt would 'strictly' go towards climate change....Elsewhere in Eurozone politics, the euro briefly stumbled with an Italian....The League is in a dominant position in the polls and with a small further bump....Risks are lower than they were in prior elections with an exit from the eurozone....Watch EURCHF for a better appreciation of these risks...Ominous UK GDP Report....Aside from the obvious warning signs the UK GDP contraction calls for supporters....The 1...6% y/y decline in business investment was countered by 0...7% rise in government spending focused on healthcare...The usually functioning services sector, showed no growth for the 4th straight....Back to the Bank of Canada...It's been weeks since Poloz and company weighed in and there is nothing....A cut would be premature and certainly isn't justified by recent economic....However, if it's coming, there will need to be some kind of BOC signal..
Intraday Market Thought: Curve Inverts Despite Trump Reverse

by Adam Button | Aug 14, 2019 16:21
Trump gives it, market takes it away...Less than 24 hours after markets rallied 1...5% on Trump's announcement to delayed US tariffs on a portion of the....2% for the Dow) after the most popular measure of the US yield curve (10y-2y)....The other reason (if these matter to you) is related to China's reaction...More detail on how this YC measure differs from other measures and its....Ashraf issued a video for Premium subscribers last night (posted below) on....4% rebound...Trump explained the reason to delay tariffs on many consumer products until....He also hinted that he was expecting agricultural purchases in exchange...Chinese reports gave less on an indication of a thaw...They highlighted that it was the US who made the call and press reports took a....Those aren't the actions of a country who is looking to compromise...A Few Pointers on the Yield Curve....Here is a series of tweets Ashraf made on the topic...Bear in mind it took about 6-12 months on average for the US economy to dip....Chronicles of a Fed Error....Contributing to the sell-off in indices were remarks from St Louis Fed's....And so as long as the Fed find no reason to cut rates further and markets are....Adding to the angst in bonds was the July US CPI report...Prices rose 1...8% y/y compared to 1...7% expected but that modest number disguises a near-term jump in core....Ex food and energy, prices rose 0...3% m/m; combined with the same rise in June, that's the fastest two-month....The flipside was the wage growth was dismal.
Intraday Market Thought: EUR GBP USD Triangularity

by Adam Button | Dec 17, 2019 12:25
Pound loses all of its post-elections rally after PM Johnson said he would not....nbsp; US economic data on Monday was mixed as the market eases back towards....The euro is again the top performer on Tuesday, with EURUSD rising for the 3rd....nbsp; UK employment data was mixed, showing fresh declines in unemployment....Ashraf summarizes the EUR-GBP-USD situation in his tweet below...US Industrial production and housing starts/permits are next...Cliff-edge Headlines are Back?....Johnson's insistence to complete a trade deal by Dec 2020 is viewed by the....This has led to GBP selloff, especially as EU negotiators said it's highly....Whether Johnson is using the threat of a hard Brexit as a means to rush through....nbsp;....Global PMIs....The next leg in broad markets will depend on the strength of global growth....It will be weeks before we have a better idea of how strong the economy is but....It's clear now that most data points have stabilize since September but few....On Monday, the Markit US services PMI was at 52...2 compared to 52...0 expected...That's an improvement from the 50...7 low in October but still well-below 56...0 in February...On the manufacturing side, the index was at 52...6 compared to 52...6 expected...That's flat from the prior month and there was no improvement in new orders...Along the same lines, the Empire Fed manufacturing index was at +3...5 in November compared to +4...0 expected...It remains squarely in the doldrums...One spot that's inarguably turning higher is housing...The sensitivity to interest rates in the past two years has been remarkable...The home builders sentiment survey rose to a 20-year high on Monday at +76 vs....In a global sense, US house prices are still relatively low so that sector....Globally, the picture is also mixed...Markit's eurozone manufacturing PMI deteriorated to 45...9 in December compared to 47...3 expected...That was just a shade above the September low...In contrast, weekend industrial production data from China was a bit..