Original insights into market moving news

[PODCAST] US Open Rundown 6th January 2021

  • Desks have called Warnock (D) as the winner against incumbent Loeffler (R); while Ossoff (D) currently leads against Perdue (R) - but, thus far most major outlets have not called this race
  • Given the seeming result of Democrats controlling the Presidency, House & Senate the fiscally driven reflation narrative has resumed; RTY +2.4%, NQ -2.2%, US 10yr yield 1.03%, DXY at lows of 89.22
  • US President Trump signed an executive order banning transactions with 8 Chinese software applications; NYSE is reportedly considering reverting to its original plan for the delisting of Chinese telecoms
  • US VP Pence said he told President Trump he lacks power to change election results and will attend election certification
  • Looking ahead, highlights include Final  US services & composite PMIs, German  national CPI, US ADP, factory orders, DoEs, Congressional Electoral College vote count, FOMC minutes, BoE's Bailey


US Georgia Senate Run-off results came in overnight In what was a closely contested race in which Democrat candidates led for most the count before the Republicans eventually caught up and briefly overtook the lead. Since then, a vast number of desks have called Democrat Warnock as the victor in the race against incumbent Republican Loeffler; with Warnock himself claiming victory. In terms of the other race, the tide has turned with Democrat Ossoff having overtaken Republican Perude with around 99% of votes reported - so far, just Decision Desk have called this race in favour of Democrat Ossoff.

Link to the morning's newsquawk analysis on the Senate Run-off

Georgia Secretary of State said workers will probably break for the night and resume vote counts on Wednesday morning, while officials in Chatham County in Georgia said they have stopped counting votes for the night and won't return until 08:00EST/13:00GMT on Wednesday. (Newswires)


Reported that passengers have been banned from boarding flight to the UK without a negative COVID test. (Telegraph)

Millions more COVID-19 vaccines are on the way to the UK and 2mln were dispatched to NHS hubs this week, according to the Times. (Guardian/Times)

French Infectious Disease expert says new lockdowns cannot be ruled out; but, presently too early for a nationwide one, case for additional local measures. (Newswires)

The European Medicines Agency is expected to recommend using Moderna’s (MRNA) coronavirus vaccine today. (Politico)


Asian equity markets traded cautiously with markets fully focused on the Georgia Senate Run-off results which has been a close contest in which the Democrat candidates have led for most the day which saw an early bout of weakness in US equity futures as some began to price in a potential blue wave and increased prospects of higher corporation tax, as well as tougher regulations on large tech, but with price action limited given that the race was still too close to call. ASX 200 (-1.1%) weakened with tech leading the broad declines across nearly all sectors aside from energy which benefited from the OPEC+ agreement whereby Russia and Kazakhstan are to raise output by a total of 75k bpd in February and another 75k bpd in March, which Saudi Arabia have overcompensated for with a voluntary 1mln bpd cut. Nikkei 225 (-0.4%) was tentative heading into the state of emergency decision due tomorrow with Japan said to eye a 1-month emergency for the Tokyo region and KOSPI (-0.7%) was initially buoyed after breaching the 3,000 level for the first time ever but then succumbed to the widespread caution. Hang Seng (+0.1%) and Shanghai Comp. (+0.6%) were indecisive with sentiment not helped after US President Trump signed a fresh executive order banning transactions with 8 Chinese software applications including Ant Group's Alipay and Tencent QQ, while NYSE flip-flopped again and is reportedly considering reverting to the original plan for the delisting of Chinese telecom giants if they are confirmed to be part of the executive order banning firms with links to Chinese military. Finally, 10yr JGBs were subdued with price action stuck around the 152.00 focal point amid tepid 10yr JGB auction results which were mostly in line with the prior and alongside pressure in T-notes as the 10yr yield breached 1% with markets beginning to price in chances of a blue sweep which would increase prospects for greater stimulus measures and bond issuances.

PBoC injected CNY 10bln via 7-day reverse repos at a rate of 2.20% for a net daily drain of CNY 130bln. (Newswires) PBoC set USD/CNY mid-point at 6.4604 vs exp. 6.4567 (prev. 6.4760)

Chinese Caixin Services PMI (Dec) 56.3 vs. Exp. 57.9 (Prev. 57.8)

  • Chinese Caixin Composite PMI (Dec) 55.8 (Prev. 57.5)

US President Trump signed an executive order banning transactions with 8 Chinese software applications including Ant Group's Alipay, while CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay and WPS Office are the other apps targeted, while Commerce Secretary Ross stated that they will begin implementing President Trump's executive order regarding Chinese apps. Subsequently, China said they will take measures to safeguard the Cos legitimate rights. (Newswires)

NYSE is reportedly considering reverting to its original plan for the delisting of Chinese telecoms companies in which a source noted it will restart delisting plans against the 3 Chinese telecom giants if those companies are confirmed to be part of the executive order banning firms with links to Chinese military. Furthermore, it was separately reported that S&P Dow Jones said they will keep China telecoms ADRs in indexes which were previously being deleted. (Newswires)

Hong Kong police were reportedly rounding up dozens of pro-democracy politicians and have entered law firm of former pro-democracy politician Albert Ho where they arrested American lawyer John Clancey under national security laws, while there were Incoming US Secretary of State Blinken says Hong Kong arrests are an assault on human rights, according to AFP. Hong Kong police say they will continue to make arrests. (Newswires/Twitter)


Fed's Evans (voter, dove) suggested they would welcome above 2% inflation and 3% would not be so bad, but added it is hard to imagine out of control inflation. (Newswires)

US VP Pence said he told President Trump he lacks power to change election results and will attend election certification, according to NYT.


EU Markit Comp Final PMI (Dec) 49.1 vs. Exp. 49.8 (Prev. 49.8); Services PMI 46.4 vs. Exp. 47.3 (Prev. 47.3)

  • German Markit Comp Final PMI (Dec) 52.0 vs. Exp. 52.5 (Prev. 52.5)
  • German Markit Services PMI (Dec) 47.0 vs. Exp. 47.5 (Prev. 47.7)

UK Markit/CIPS Services PMI Final (Dec) 49.4 vs. Exp. 49.9 (Prev. 49.9)

  • Composite PMI Final (Dec) 50.4 vs. Exp. 50.7 (Prev. 50.7)

UK BRC Shop Price Index (Dec) Y/Y -1.8% (Prev. -1.8%). (Newswires)


Iran's Atomic Energy Organization says Iran is capable of enriching uranium to 40% and 60%, according to Sky News Arabia. (Twitter)

Turkey is reportedly shelling targets at a Russian military base around Tel Tamer, Northern Syria, Sky News Arabia. (Twitter)

Chinese military aircraft has entered Taiwan's air defence identification zone on January 6th. (Newswires)


Cash bourses in Europe trade higher across the board (Euro Stoxx 50 +0.9%) following on from a relatively mixed APAC session, but focus has very much been on the US Georgia Senate run-offs in order to determine the limits of the incoming Biden admin policy via Congress. Democrats are now set to control Congress in what marks a blue-sweep after Democrat Raphael Warnock and Jon Ossoff were called by major news outlets in early European hours. That would leave the split in the upper house at 50/50, giving Vice President(-elect) Harris the tie-breaking vote in the event of a deadlock – full analysis available here. In terms of implications for stock markets, markets bid up value vs growth as portrayed by the tech-heavy NQ (-1.7%) posting losses of almost 2% and the value-driven RTY (+1.3%) gaining almost 2% at one point – with the former also bearing the brunt of more stringent regulations in large-tech alongside the reflationary play from prospects of further stimulus. For context, the pre-market sees losses among Apple (-1.8%), Amazon (-1.9%), Google (-2.1%), FB (-2.4%), Netflix (-1.9%) whilst Tesla (+2.1%) sees gains on climate policy hopes. Back to Europe, gains in a post-OPEC Energy sector and Banks (amid the high yield environment) tower other sectoral performances, with the FTSE 100 (+1.4%) benefiting from the firm upside in two of its heaviest sectors. The IT sector meanwhile lags amid value being favours and alongside follow-through from the pre-market performance in tech behemoths. In terms of individual stories, the Travel & Leisure sectors warmly received reports that airlines flying into the UK will be made to ban passengers from boarding the aircraft if they do not have a negative COVID-19 test within a 72-hour window of departure – thus narrowing the chances of further cross-country travel bans.

UnitedHealth (UNH) is to purchase Change Healthcare (CHNG) for USD 25.75/shr, USD 13bln value for the total deal. (Newswires)

Amazon (AMZN) are launching a USD 2bln housing equity fund. (WSJ)


USD - Any semblance of support or even upside impetus from higher Treasury yields has been swept aside along with the Democratic tide that is heading for Congress after the Georgia state run-offs that seem destined to result in Republican defeats, albeit by narrow margins. Indeed, the Greenback has fallen further amidst more almost all round selling on the same multiple reflation, fiscal and global growth regeneration factors that have been prevalent ever since polls predicted a landslide Biden victory in the 2020 Presidential Election and clean Blue sweep. However, the DXY has clambered of fresh multi-year lows and is holding above 89.000 within a 89.644-219 range ahead of ADP, the non-manufacturing ISM and FOMC minutes.

NZD/AUD - A new day draws to a close down under, but the Kiwi and Aussie have both probed different round number levels vs their US counterpart and swapped places in the pecking order as Aud/Nzd tops out above 1.0700 again in wake of slowdowns in Aussie and Chinese Caixin services and composite PMIs. Nzd/Usd is now hovering just shy of 0.7300 and Aud/Usd around 0.7800 awaiting more independent direction via trade and housing data on Thursday.

EUR - The next best major or benefactor of Buck weakness rather than anything Eurozone specific, as the Euro reclaims 1.2300+ status and eyes 1.2350 to the upside as opposed to decent option expiry interest at the 1.2300 strike (1.1 bn). In fact, Eurozone services PMIs and composites were largely underwhelming and German state CPIs still soft, while there is the spectre of another Italian political debacle following tomorrow’s coalition cabinet showdown – check out the headline feed at 9.38GMT for a primer.

CHF/GBP/CAD - All moderately firmer against the US Dollar as the Franc extends gains through 0.8800 towards 0.8760, Cable rebounds firmly from sub-1.3600 irrespective of the effective UK national lockdown and economic repercussions, and the Loonie consolidates post-OPEC+ gains alongside crude circa 1.2650 in the run up to Canadian trade and Ivey PMI releases on Thursday.

JPY - The G10 laggard as emergency status in Tokyo is extended following another record rise in daily cases of the coronavirus in Japan, while less contractionary PMIs were somewhat offset by a deterioration in consumer confidence. Usd/Jpy is still below 103.00 and looking technically weak nonetheless having tested 102.60.

SCANDI/EM - Eur/Nok has now managed an oil-powered breach of 10.4000 with additional momentum from firmer Norwegian credit and house prices, but Eur/Sek is still finding 10.0000 tough to overcome. Elsewhere, very familiar prudent, targeted and flexible monetary policy pledges from the PBoC have not really impacted the Cnh or Cny that are pivoting 6.4400 and 6.4500 respectively, but the Zar continues to underperform near 15.0000 post a fragile barely 50.0+ SA PMI and pre-stage 2 load shedding by Eskom.


Debt remains in the doldrums amidst fleeting bounces of the dead cat variety and typified by the lack of a meaningful reprieve for Gilts after a solid looking DMO auction, in terms of cover if nothing else. The 10 year UK benchmark is well off its earlier recovery high of 135.07 and back down towards the 134.68 Liffe low in line with Bunds following a mediocre 2031 sale and USTs that are hugging overnight session troughs ahead of a packed pm agenda that might shift the spotlight from Georgia and a different form of DC in Washington, for a while at least. However, bears are firmly in control and it’s highly doubtful whether even ultra-dovish FOMC minutes will stop the rot (or rout to be precise).


WTI and Brent front-month futures continue grinding higher in early European trade following somewhat of an overnight pause in the aftermath of the OPEC+ meeting. To recap, Russia and Kazakhstan will increase output by 75k BPD due to seasonality, but Saudi Arabia surprisingly announced it that will make additional, voluntary oil output cuts of 1mln BPD in February and March as a pre-emptive measure and has not asked any other country to join in. Oil prices unsurprisingly cheered the news with Brent almost hitting USD 54/bbl in the immediate aftermath, with prices also underpinned by a larger-than-expected draw in Private inventories (-1.7mln vs exp. -1.3mln). That being said, it begs to be asked what Saudi's demand outlook is for the complex in order to voluntarily provide cuts of this magnitude. Nonetheless, the crude complex has continued to grind higher in European trade with Brent now eyeing USD 54.50/bbl to the upside. Elsewhere, precious metals trade on a firmer footing amid the reflationary play coupled with a softer Buck, with spot gold extending gains north of USD 1950/oz (vs. low USD 1941/oz) and spot silver inching closer to USD 28/oz (vs. low USD 27.205/oz). Finally Shanghai copper rose to the highest in almost eight years amid the hopes of swifter US stimulus coupled with the weaker Dollar. US Private Energy Inventories (bbls): Crude -1.7mln (exp. -1.3mln), Cushing +1.0mln, Gasoline +5.5mln (exp. +0.6mln), Distillate +7.1mln (exp. +2.4mln).

OPEC+ will hold the next JMMC meeting on February 3rd with the next full meeting on March 4th, while earlier reports also noted that OPEC+ technical and monitoring ministerial meetings are scheduled for February 2nd and 3rd, according to a document. (Newswires)

CME lowered crude oil futures NYMEX maintenance margins for February by 4.7% to USD 4,525/contract from USD 4,750/contract. (Newswires)

Libya's eastern Marsa el-Hariga port still closed, after a PFG sit-in strike came In place yesterday because of unpaid salaries, according to Argus. (Twitter)