Original insights into market moving news

[PODCAST] US Open Rundown 11th September 2019

  • European equities are firmer this morning supported by China releasing a US tariff exemption list, subsequently Commerce Ministry noted that certain agreements may be reached prior to October meeting
  • US President Trump says Fed should cut rates to zero or less, and then US should refinance its debt
  • Amazon (AMZN) are to be probed by antitrust officials in the US regarding their Marketplace platform
  • Scottish Court has ruled that PM Johnson's proroguing of parliament is illegal
  • Looking ahead, highlights US PPI & DoEs, US 10yr supply


Asian equity markets eventually traded mostly higher as the region shrugged-off the indecision from Wall St, which had been subdued by the continued global bond rout and tentativeness ahead of this week's ECB. ASX 200 (+0.3%) and Nikkei 225 (+1.0%) were higher but with gains in Australia capped as the outperformance in mining names was counterbalanced by weakness in tech, while Tokyo exporters continued to reap the benefits of recent currency weakness and after source reports suggested BoJ policymakers could be open to additional easing measures. Advances were also seen across the Apple supply chain in Japan and Taiwan following the tech giant’s launch event where it announced a new streaming service and health app, as well as new iWatch, iPhone and iPad models. Hang Seng (+1.7%) and Shanghai Comp. (-0.4%) were mixed after a tepid PBoC liquidity effort in which the mainland failed to take impetus from China’s fresh efforts to further open its financial markets by dropping QFII and RQFII quota limits. Sources noted China is ready to sweeten a deal by buying US goods, however, the report added that a purchase agreement is no certainty and would be in exchange for a delay on tariffs as well as an easing of restrictions on Huawei. China’s Global Times Editor also later suggested China will introduce important measures to ease the impact from the trade war which would benefit some companies from both China and the US which briefly fuelled appetite for risk. Finally, 10yr JGBs were lower amid a continuation of the global bond rout which was partly attributed to this week's supply and heavy corporate issuances, with weaker results across all metrics in today’s 5yr JGB auction adding to the pressure.

PBoC injected CNY 30bln via 7-day reverse repos. (Newswires) PBoC set CNY mid-point at 7.0843 vs. Exp. 7.0870 (Prev. 7.0846)

China Global Times Editor tweeted 'Based on what I know, China will introduce important measures to ease the negative impact of the trade war. The measures will benefit some companies from both China and the US.'. (Twitter)

China releases tariff exemption list for products from the US; takes effect on September 17th., Xinhua

- Items on the list will not be subject to additional tariffs imposed by China on US goods as countermeasures to trade action taken by the US

- Exemptions include food products and lubricants; though does not list corn, soybeans or pork

- Will consider tariff exemptions for additional products which are imported from the US

Tariff exemption list by China is a goodwill gesture amidst the resumption of trade talks, Global Times; China and the US may reach certain agreements before a scheduled meeting in early October, according to an expert close to the Ministry of Commerce. (Global Times)


US President Trump says Fed should cut rates to zero or less, and then US should refinance its debt. (Newswires)

Russian intelligence agency are looking into the case of alleged US spying in the Russian presidential election., according to the Kremlin. (Newswires)


Saudi Arabia condemned Israel PM Netanyahu's plan to annex parts of West Bank and called for a meeting of the Organization of Islamic Cooperation foreign ministers to discuss the move. (Newswires)


UK PM Johnson's decision to suspend Parliament is unlawful, according to a Scottish Court via a lawyer, as such the case will now go to the UK Supreme Court on Tuesday; as of yet no order has been given to suspend the UK Supreme Court. (Newswires)

UK PM Johnson reiterated to the Cabinet that he will not negotiate Brexit delay in Brussels on October 17th-18th and that his Brexit goal is unchanged by law passed by Parliament, according to ITV's editor citing sources. (Twitter)

UK PM Johnson is mulling plans for a regulatory border in the Irish Sea as he seeks a new Brexit “divorce” deal with the EU, according to The Telegraph. The move would see an all-Ireland zone for checks on most goods crossing between the north and south Ireland, thus removing the need for a backstop. (Telegraph)

DUP leader Foster later stated that an all-Ireland backstop idea has been dismissed by UK PM Johnson. (Newswires/ITV/Twitter)

UK opposition Labour Party Deputy Leader Watson is calling for a Brexit referendum to be conducted before a snap election. (Huffington Post)

UK MPs seeking to block a no-deal are reportedly examining ways to bring back a version of former PM May’s Brexit deal with a 2nd referendum attached. Sources added that the cross-party motion is gathering strength as more current and former Conservative MP’s are accepting of the idea. (Guardian)

ComRes Poll showed a majority of the public back UK PM Johnson over Brexit according to Telegraph, while the poll also showed Conservatives with 30% (-1) of support and Labour with 29% (+2) of support. (Telegraph/Twitter)

IFW cuts Germany’s 2019 GDP growth forecast to 0.4% from 0.6%; 2020 GDP growth forecast cut to 1.0% from 1.6%. (Newswires)


Major European bourses are broadly in the green [Eurostoxx 50 +0.5%], following on from a similar APAC lead as sentiment is supported by China releasing a tariff exemption list for the US, effective from September 17th. Items on the list will not be subject to additional tariffs imposed by China on US goods as countermeasures to trade action taken by the US, however, the list does not include corn, soybean or pork. Spain’s IBEX (U/C) is the underperformer thus far amid disappointing earnings from heavyweight Inditex (-2.9%) whilst broad-based gains are seen across the region. Sectors are mixed with defensive sectors lagging, although the energy sector also feels some headwind from yesterday’s price decline in the oil complex. Turning to individual movers, LSE (+5.6%) shares spiked higher amid reports that Hong Kong Exchanges and Clearing have proposed a combination with LSE, terms of proposed deal would imply an enterprise value of GBP 31.6bln, and the transaction implies a value of GBP 83.61 for each LSE share. LSE said its board will consider the proposal. On the flip side, Suez (-1.3%) and Kone (-1.9%) opened lower amid downgrades, although the former saw some upside amid reports that the Co. won an approx. EUR 1bln treatment contract for the Dongying China chemical plant, contract is for 50 years.

Amazon (AMZN) are to be probed by antitrust officials in the US regarding their Marketplace platform. (Newswires)


EUR - Not quite the biggest G10 loser or underperformer, but the single currency has been a notable mover after topping out above 1.1050 against the Dollar and failing to close above key resistance just below yet again (1.1049 represents a 38.2% retracement of the decline from 1.1249 to 1.0926 ytd low). Eur/Gbp selling into the early 9 am fix may also have impacted, as the cross retests recent sub-0.8925 lows, but Eur/Usd is holding around the 10 DMA and bids said to be sitting just below (at 1.1022 and 1.1020 respectively) with one eye on Thursday’s ECB meeting and some form of easing/stimulus as German institutes continue to downgrade GDP estimates, while the other keeps tabs on higher global bond yields/spreads.

JPY/CHF - More safe-haven unwinding has nudged the Yen and Franc down to circa 107.85 and 0.9940 vs the Buck, and Usd/Jpy has breached a Fib, exporter offers plus a cloud top formation in the process, at 107.49, 107.50 and 107.71, with some fundamental/macro impetus stemming from another upturn in US Treasury yields and more curve steepening against the backdrop of positive-looking US-China trade headlines (such as Chinese tariff exemptions and buying US goods as a sweetener for upcoming talks).

GBP/AUD/NZD/CAD - All narrowly mixed vs the Greenback, with Cable forming multiple/lower peaks ahead of 1.2400 and reported stops at 1.2385+ and the Aussie fading into 0.6900 and the 100 DMA at 0.6907 following another downbeat sentiment survey overnight (Westpac consumer confidence turned negative). However, the Pound has not seen much angst in wake of an official ruling in Scotland against UK PM Johnson’s Parliament prorogation, while Aud/Usd is still outpacing Nzd/Usd as the latter remains heavy on the 0.6400 handle and the Kiwi struggles to stay above 1.0700 in cross terms ahead of NZ manufacturing PMI tomorrow and Westpac’s Q3 consumer survey on Friday. Elsewhere, the Loonie is maintaining its post-Canadian jobs momentum, but finding 1.3150 a tough hurdle to overcome convincingly.

NOK/SEK - Even though crude prices remain on a roll and the Norges Bank is still on course to take another step towards policy normalisation before the Riksbank (albeit not likely next week given yesterday’s soft inflation data), Eur/Nok is hovering around 9.8850 within a 9.9010-9.8765 range in contrast to Eur/Sek nearer the base of 10.6990-6595 parameters in wake of latest Riksbank comments reaffirming tightening guidance and dismissing weaker than expected Swedish CPI/CPIF metrics.

EM - The Rand’s bull run has been derailed around 14.6100 vs the Dollar and a deterioration in SA business confidence has hardly helped as Usd/Zar rebounds to 14.7000+, even though Moody’s indicated low risk of a ratings downgrade this year.

Notable FX Expiries:

- EUR/USD: 1.0990-1.1000 (1.3BLN), 1.1050 (414M)

Australian Westpac Consumer Confidence (Sep) -1.7% (Prev. 3.6%). (Newswires)


It was looking ominous when Bunds pierced yesterday’s Eurex low, Fib support and the next downside chart level to trade at 173.65, but alongside Eurozone debt counterparts the ensuing bounce has been pretty pronounced if not encouraging or compelling. Indeed, the 10 year benchmark just reached 174.07 (+9 ticks vs -33 ticks at one stage) before waning vs Gilts that remain 35 ticks adrift, albeit off a 131.99 Liffe base (-59 ticks) and US Treasuries still soft/steeper, though also above overnight session troughs with the curve not as steep as it has been. Perhaps more pre-ECB positioning has prompted the turnaround, but more immediately US PPI forms a precursor for CPI on Thursday and 10 year supply comes with a bit more of a concession at 1.70%+ after last night’s rather tepid 3 year sale.


WTI and Brent futures are holding onto most of its intra-day gains/consolidation following yesterday’s decline which was induced by the EIA cutting its 2019 and 2020 global oil demand forecasts by 100k BPD and 30k BPD, whilst downside was exacerbated after US President Trump fired the White House National Security Advisor/known policy-hawk Bolton. Prices have rebounded and remain on an upward trajectory thus far with WTI futures around the 58.00/bbl mark whilst its Brent counterpart trades just under 63.00/bbl (at time of writing). This morning also saw the release of the OPEC Monthly Oil Report in which its 2019 global oil demand growth forecast was revised lower by 80k BPD, in-fitting with the EIA STEO, next up IEA will release its report tomorrow at 0900BST. Ahead of tomorrow’s JMMC meeting, the Iraqi Oil Minister noted that the producers will have a discussion on whether or not there is the need for a deeper production cut with OPEC+, although this was rebuffed by the Russian Energy Minister who also expressed concern regarding global economy. Novak added that the slowing global demand for oil will also be discussed at the meeting tomorrow. Elsewhere, gold prices remain capped below the 1500/oz ahead of this week’s key risk events including US CPI and the ECB rate decision, whilst copper prices are little changed with little by way of immediate catalyst. Finally, Dalian iron ore prices rose for a third session amid a decline in shipments coupled with hopes of further Chinese stimulus.

US White House invited biofuel company executives to meet regarding the stalled biofuel policy deal. (Newswires)

Russian Energy Minister Novak says current oil prices are defined by the market, he did not discuss the possibility of oil prices rising with Saudi Energy Minister Abdulaziz, only discussed cooperation with OPEC+ alliance. (Newswires)

- says he is concerned by the slowdown in the global economy, says OPEC+ will discuss the slowing global demand for oil. (Newswires)

Iraqi Oil Minister says they will have a discussion on whether or not there is the need for a deeper production cut with OPEC+ at the JMMC meeting. (Newswires)

OPEC Monthly Oil Report: For 2019, oil demand growth is forecast at around 1.02mln BPD; down 80k BPD from the prior report; OPEC crude production in August rose 136k BPD to average 29.74mln BPD, according to secondary sources

Suspected coronavirus in Scotland, UK, according to BBC reporter. NOTE: SUSPECTED