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Fixed bid after a strong 5yr auction with FX & equities relatively contained - Newsquawk Europe Market Open

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Tuesday, Nov 28, 2023 - 06:31 AM
  • APAC stocks traded mixed amid the lower yield environment and after the lacklustre performance of US counterparts.
  • DXY traded flat and was confined to within a tight range, USD/JPY tested 148.00 to the downside, Antipodeans were marginally firmer.
  • 10-year UST futures marginally eased back from the 109.00 level after rallying on the back of soft US housing data and a strong 5yr auction, while a weak 2yr offering failed to derail the momentum.
  • European equity futures are indicative of a slightly lower open with Euro Stoxx 50 -0.1% after the cash market closed down 0.4% yesterday.
  • Looking ahead, highlights include German GfK Consumer Sentiment, French Consumer Confidence, Italian Producer Prices, Italian Trade Balance, US Consumer Confidence, Richmond Fed Index, Fed Discount Rate Minutes, Speeches from BoE’s Ramsden & Haskel, ECB's Lane, Fed’s Goolsbee, Waller, Bowman & Barr, Supply from UK & US.
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US TRADE

EQUITIES

  • US stocks finished marginally lower on what was a choppy session on Cyber Monday despite a two-day extension to the Israel-Hamas truce and with late pressure seen heading into the close amid selling in Meta after a judge ruled against it in its privacy lawsuit with the FTC. Treasuries rallied as yields fell following soft New Home Sales and Dallas Fed Manufacturing data, as well as a strong 5yr auction.
  • SPX -0.19% at 4,550, NDX -0.13% at 15,962, DJI -0.16% at 35,333, RUT -0.35% at 1,801.
  • Click here for a detailed summary.

NOTABLE HEADLINES

  • White House said the US is seeing lower prices on items from fuel to food.

APAC TRADE

EQUITIES

  • APAC stocks traded mixed amid the lower yield environment and after the lacklustre performance of US counterparts.
  • ASX 200 was higher with early outperformance on softer yields and following a break above the 7,000 level although the index finished off intraday highs following a surprise contraction in Retail Sales data.
  • Nikkei 225 failed to hold on to opening gains and was pressured as a firmer currency paved the way for profit-taking.
  • Hang Seng and Shanghai Comp diverged despite recent support pledges by the PBoC as a report also suggested that China’s property lifeline exposes banks to large losses and job reductions.
  • US equity futures were little changed in the absence of any fresh catalysts stateside ahead of key data and month-end.
  • European equity futures are indicative of a slightly lower open with Euro Stoxx 50 -0.1% after the cash market closed down 0.4% yesterday.

FX

  • DXY traded flat and was confined to within a tight range of between 103.07-103.17 after recent pressure owing to a decline in yields after soft US data releases and with Barclay's month-end rebalancing model indicating a broad-based, strong dollar selling signal, while participants also await this week’s key event for the dollar including the Fed’s preferred inflation gauge which is due on Thursday.
  • EUR/USD was steady and took a breather following yesterday’s intraday recovery and return journey to above the 1.0950 level.
  • GBP/USD remained afloat after it found near-term support at the 1.2600 level and with overnight comments from BoE Deputy Governor Ramsden who suggested that monetary policy needs to be restrictive for sufficiently long.
  • USD/JPY tested 148.00 to the downside with outperformance in the Japanese currency helped by narrowing yield differentials.
  • Antipodeans were marginally firmer in which AUD/USD extended above the 0.6600 level despite the disappointing Retail Sales, while NZD/USD printed its highest since August after it reclaimed the 0.6100 status.
  • PBoC set USD/CNY mid-point at 7.1132 vs exp. 7.1432 (prev. 7.1159).

FIXED INCOME

  • 10-year UST futures marginally eased back from the 109.00 level but held on to most of the prior day’s gains after rallying on the back of soft US housing data and a strong 5yr auction, while a weak 2yr offering failed to derail the momentum.
  • Bund futures took a breather after climbing above the 131.00 level and as the focus turns to German GfK Consumer Sentiment.
  • 10-year JGB futures initially tracked the recent advances in global counterparts and eyed the 146.00 level to the upside but later gave back some of the gains after weaker demand at the 40yr JGB auction despite a decline in accepted prices.

COMMODITIES

  • Crude futures lacked direction in which Brent and WTI crude futures traded both sides of the USD 80/bbl and USD 75/bbl, respectively, ahead of Thursday's OPEC+ meeting with members yet to reach an agreement as Saudi seeks quota cuts, while others are resisting.
  • Energy Intel noted there is still no resolution regarding new OPEC+ production baselines and cuts, while it added that the meeting is still scheduled to take place virtually on Thursday but it understands that a further delay cannot be ruled out.
  • Spot gold traded sideways with prices stuck around the USD 2015/oz level alongside an uneventful dollar.
  • Copper futures were lacklustre amid the mixed risk tone but with downside stemmed by support at USD 3.75/lb.

CRYPTO

  • Bitcoin was marginally lower in rangebound trade but remained above the USD 37,000 level.
  • Interactive Brokers (IBKR) expanded its cryptocurrency trading to retail investors in Hong Kong.

NOTABLE ASIA-PAC HEADLINES

  • PBoC Governor Pan said China's economy continued to gain momentum in recovery and reiterated that China's economy is expected to achieve its GDP growth target for 2023, while he added that China's CPI is gradually bottoming out and consumption's contribution to the domestic economy is on the rise. Furthermore, Pan said they will continue to keep monetary policy accommodative and will make it easier for foreign financial institutions to do business in China, according to Reuters.
  • Chinese Premier Li Qiang said China is willing to build closer supply chain linkages with all countries, while it opposes any form of decoupling and cutting off of supply chains. Li added that China will continue to create an international and rule-of-law-based business environment, according to Reuters.
  • China’s property lifeline reportedly exposes banks to large losses and job reductions, according to Bloomberg.

DATA RECAP

  • Australian Retail Sales MM (Oct F) -0.2% vs. Exp. 0.1% (Prev. 0.9%)

GEOPOLITICS

  • Israel released 30 Palestinian children and three women under the truce agreement and it received a list of ten hostages to be released by Hamas on Tuesday, while it was separately reported that Israel approved a list of 50 female Palestinian prisoners for possible release if additional Israeli hostages are freed, according to Reuters.
  • Israeli Defence Minister said when they return to fighting after the truce, the fighting will be stronger and will include all parts of the Gaza Strip, according to Sky News Arabia.
  • Hamas Leader Khalil Al-Hayya told Al Jazeera they hope they can extend the truce for a longer period, according to Al Jazeera.
  • Al Jazeera reported via social media platform X that Israeli occupation forces raided Beitunia which is west of Ramallah.
  • "Palestinian media: Israeli forces fire heavily east of Khan Yunis in the southern Gaza Strip", according to Al Arabiya.
  • US Secretary of State Blinken is to visit Israel, the West Bank and UAE later this week and will stress in meetings the need to sustain increased flow of humanitarian assistance to Gaza and secure the release of all hostages, according to a US official
  • North Korea said its spy satellite took photos of the White House, the Pentagon and a key US naval base, according to Yonhap.

EU/UK

NOTABLE HEADLINES

  • BoE Deputy Governor Ramsden said UK inflation is more homegrown and monetary policy is likely to need to be restrictive for an extended period of time to get inflation back to the 2% target, while he doesn't see financial stability grounds for adjusting quantitative easing or the setting of the level of interest rates.

DATA RECAP

  • UK BRC Shop Price Index YY (Nov) 4.3% (Prev. 5.2%)
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