Stocks slip, Bitcoin slides and crude rips higher - Newsquawk Asia-Pac Market Open

• US stocks continued the downward New Year trend after the Santa Rally towards the end of 2023 with the downside led by the Russell 2000. 
• FOMC Minutes stated that participants viewed the policy rate as likely at or near its peak. Members generally viewed the addition of the word 'any' to comments on possible additional firming as relaying their judgment that rates were likely at or near the peak of the cycle.
• The Dollar was firmer and continued its strong start to 2024. The Buck was initially supported by firmer yields in the EU morning and general risk-averse sentiment, but the Greenback managed to maintain its bid despite two-way action in Treasuries in the wake of the FOMC Minutes.
• Oil prices ripped higher on Wednesday on the threat of a widening Israel conflict and on supply troubles in Libya.
• Looking ahead, highlights include Australian Services PMI, Japanese Manufacturing PMI, Hong Kong Manufacturing PMI, and Chinese Caixin Services PMI. 

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4th January 2024

SNAPSHOT

FOMC MINUTES

• FOMC Minutes stated that participants viewed the policy rate as likely at or near its peak. Members generally viewed the addition of the word 'any' to comments on possible additional firming as relaying their judgment that rates were likely at or near the peak of the cycle. A number of participants highlighted uncertainty around how long restrictive policy would need to be maintained.
• Several participants observed that circumstances might warrant keeping the policy rate at the current level longer than they currently anticipate. Participants generally reaffirmed it would be appropriate for policy to remain restrictive until inflation was 'clearly moving down sustainably'.
• Several participants remarked that the Committee's balance sheet plans indicated that it would slow and then stop the decline in the size of the balance sheet when reserve balances are somewhat above the level judged consistent with ample reserves. These participants suggested that it would be appropriate for the Committee to begin to discuss the technical factors that would guide a decision to slow the pace of runoff well before such a decision was reached in order to provide appropriate advance notice to the public.
• Click here for the full release.

US TRADE

• US stocks continued the downward New Year trend after the Santa Rally towards the end of 2023 with the downside led by the Russell 2000.
• SPX -0.80% at 4,704, NDX -1.06% at 16,368, DJIA -0.76% at 37,430, RUT -2.66% at 1,959.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Barkin (2024 voter) said the Fed is "making real progress" on inflation while the economy remains healthy; six-month core PCE now "just below" 2% target; potential for additional rate hikes "remains on the table". March rate call is a pretty long way away

DATA RECAP

• US ISM Manufacturing PMI (Dec) 47.4 vs. Exp. 47.1 (Prev. 46.7)
• US ISM Manuf Prices Paid (Dec) 45.2 vs. Exp. 47.5 (Prev. 49.9)
• US ISM Manuf Employment Idx (Dec) 48.1 vs. Exp. 46.1 (Prev. 45.8)
• US ISM Manuf New Orders Idx (Dec) 47.1 (Prev. 48.3)
• US JOLTS Job Openings (Nov) 8.79M vs. Exp. 8.85M (Prev. 8.733M, Rev. 8.852M)
• US MBA Mortgage Applications w/e -10.7% (Prev. -1.5%)
• Atlanta Fed GDPnow (Q4): 2.5% (prev. 2.0%)

FX

• The Dollar was firmer and continued its strong start to 2024. The Buck was initially supported by firmer yields in the EU morning and general risk-averse sentiment, but the Greenback managed to maintain its bid despite two-way action in Treasuries in the wake of the FOMC Minutes.
• GBP was the G10 outperformer against the Buck, as Cable found support just above 1.26, rallying off Tuesday and Wednesday lows of 1.2612 and 1.2619, respectively, benefiting from a slight bid in early US trade as rising UK gilt yields outpaced US Treasuries.
• CHF was flat, while NZD and EUR saw slight losses amid the broad Buck bid and risk-souring sentiment. EUR/USD hit a low of 1.0894, albeit back above the round 1.09 at pixel time.
• AUD and CAD were hit by the aforementioned themes, as opposed to anything currency-specific, although the buoyant Crude prices, amid the geopolitical tensions, could not lend the Loonie a helping hand. AUD/USD and USD/CAD traded between 0.6703-6770 and 1.3318-71, respectively.
• JPY was the distinct underperformer to see USD/JPY hit a high of 143.73 and take out the 200DMA of 143.17 on the way.

FIXED INCOME

• Treasuries were choppy Wednesday after more supply-led selling was pared after dovish ISM Mfg. and JOLTS data.

COMMODITIES

• Oil prices ripped higher on Wednesday on the threat of a widening Israel conflict and on supply troubles in Libya.
• Full shutdown of production at Libya's 300k BPD Sharara oilfield on the back of protests, via Reuters citing two engineers.
• US Energy Inventory Data (bbls): Crude -7.4mln (exp. -3.7mln), Gasoline +6.9mln (exp. -0.2mln), Distillate +6.7mln (exp. +0.6mln), Cushing +0.8mln
• OPEC+ to hold monitoring meeting on February 1st, according to Reuters sources.
• Chile's Codelco Copper Production -16% Y/Y to 114.1k tonnes in November, according to Cochilco .Escondida copper production +6.3% to 84.8k tonnes in November. Collahuasi copper production +2.8% to 48k tonnes.

CRYPTO

• Downside in Bitcoin attributed to a report from Matrixport who project a January rejection for Bitcoin Spot ETFs by the SEC, cautioning traders to hedge long exposure.

GEOPOLITICAL

• The Israeli Army says they bombed Hezbollah targets in Lebanon and will continue to defend their borders against any threat, according to Al Arabiya.
• Hezbollah Head said if Israel wages war on Lebanon, there will be "no ceilings, no rules" to Hezbollah's fighting; "war with us will be very costly" and that anyone waging war against Lebanon "will regret it as Hezbollah will fight until the end". He added that the Israeli killing of Hamas Deputy Chief is a 'major, dangerous crime which we cannot be silent".
• Iran vows to punish perpetrators of Kerman explosions, according to Mizan news agency.
• IRGC Quds Force commander said the Kerman bombing was carried out by "agents of Israel and America", via Al Arabiya.
• White House said the US will continue to maintain a significant force presence in the Middle East, according to Reuters, and added the US will not shrink from defending US interests and the free flow of international commerce. White House added actions in the Red Sea directly threaten freedom of navigation.
• Turkish Foreign Minister said US Secretary of State Blinken will visit Turkey on Saturday.
• US State Department says the US was not involved in any way and has no reason to believe Israel was involved in explosions in Iran; the US remains incredibly concerned about the risk of the Gaza conflict spreading to other fronts.
• Iran's President Raisi cancels his planned visit to Turkey on January 4th after bloody Kerman attacks, according to IRNA citing an official.

ASIA-PAC

• Some of China's large banks tighten the interbank lending standard for smaller peers to mitigate credit risk, via Reuters citing sources.

EU/UK

NOTABLE HEADLINES

• Click here for the Newsquawk European Market Wrap.

EUROPEAN DATA RECAP

• German Unemployment Chg SA (Dec) 5.0k vs. Exp. 20.0k (Prev. 22.0k)
• German Unemployment Rate SA (Dec) 5.9% vs. Exp. 5.9% (Prev. 5.9%)
• Swiss Manufacturing PMI (Dec) 43.0 (Prev. 42.1)

Source: Newsquawk