Original insights into market moving news

[PODCAST] US Open Rundown 12th November 2021

  • European bourses & US futures are modestly firmer, action has been very rangebound in quiet trade, ES +0.1%
  • Russian Defence Ministry says US military activity in the Black Sea is aggressive and poses a threat to regional and strategic stability, IFX.
  • DXY remains above 95.00 but the broader complex is mixed with similar performance in fixed income on the return of cash Treasuries
  • Johnson & Johnson (JNJ) is planning to split into two companies. (WSJ), +2.3% in the pre-market
  • Looking ahead, highlights include US JOLTS, Uni. of Michigan, ECB's Lane, Fed's Williams


Mainland China reported 98 new COVID-19 cases for November 11th vs 62 cases the day before and 79 new locally transmitted cases vs 47 the day before, while other reports noted that there were 52 new locally transmitted cases in Dalian. (Newswires)

German Health Minister Spahn says free COVID-19 tests to be offered from Tuesday. (Newswires)


Asian equity markets traded mostly higher heading into the weekend as the region attempted to build on the somewhat mixed performance stateside, where price action was contained amid Veterans Day and with US equity futures also slightly picking up from the quasi-holiday conditions. ASX 200 (+0.8%) was lifted in which mining stocks and the tech industry spearheaded the broad gains across sectors aside from healthcare as Ramsay Health Care remained pressured after it recently announced a near-40% decline in Q1 net profit. Nikkei 225 (+1.1%) was underpinned with Japanese exporters benefitting from recent favourable currency flows and with the biggest stock movers influenced by a deluge of earnings. Hang Seng (+0.3%) and Shanghai Comp. (+0.2%) were indecisive with Hong Kong tech stocks encouraged after e-commerce retailers Alibaba and posted record Singles Day sales, despite a deceleration in revenue growth from the shopping festival to its slowest annual pace since its conception in 2009 amid a toned-down event due to Beijing’s tech crackdown and emphasis on common prosperity. Conversely, mainland bourses were indecisive following a neutral liquidity operation by the PBoC and after US President Biden recently signed the Secure Equipment Act which prevents companies deemed as security threats from receiving new equipment licences from US regulators, which comes ahead of Monday’s potential Biden-Xi virtual meeting. Finally, 10yr JGBs were lower due to a lack of momentum from US treasuries as cash bond markets were closed for the federal holiday, with demand for JGBs also hampered by the gains in stocks and lack of BoJ purchases in the government debt market.

PBoC injected CNY 100bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.4065 vs exp. 6.4094 (prev. 6.4145)

US President Biden signed the Secure Equipment Act which prevents companies deemed security threats such as Huawei and ZTE (763 HK) from receiving new equipment licences from US regulators. (Newswires)

China Communist Party official said President Xi is helmsman of China's rejuvenation, while an official also commented that they cannot achieve common prosperity even if gross national income was divided equally and stated that China should increase the share of direct taxes. (Newswires)

Japan's stimulus draft refrained from mentioning the size of spending and stated that the government will include a package of steps to cushion the impact on companies from higher oil prices, while there were earlier comments from Japanese Economic Minister Yamagiwa that new COVID-19 measures will seek to prevent the spread of the virus, as well as keep economic and social activities going. Subsequent reports indicate the package is to increase to over JPY 40tln in fiscal spending, Nikkei citing sources. (Newswires/Nikkei)


UK Chief Brexit Negotiator Frost is to tell EU's Sefcovic that the UK will renew efforts to get an agreement on the Northern Ireland protocol and will enter intensive discussions during the next few weeks. Frost will also assure Brussels that UK PM Johnson does not wish to trigger Article 16. (The Times)

ECB's Rehn says that relief from supply bottlenecks might not arrive until towards the end of next year, EZ area inflation is still mostly transitory, even if some companies are more persistent. No evidence of second-round inflation affects in wages thus far. (Newswires)

ECB's Simkus says inflation will fall below target in 2023, not in-line with forward guidance conditions. (Newswires)


Iran said talks with UK officials were a step in the right direction and they hope to resolve the debt dispute with the UK soon, while Britain was reported to press Iran's Deputy Foreign Minister regarding detained dual nationals. (Newswires)

Russia has detected six NATO reconnaissance flights over the Black Sea in the past 24-hours, Ria; Defence Ministry says US military activity in the Black Sea is aggressive and poses a threat to regional and strategic stability, IFX. (Newswires)

Russian Kremlin says that Moscow is not a threat to anyone (in reference to the report that the US is concerned that Russia could attack Ukraine). (Newswires)


European equities (Stoxx 600 -0.1%) have seen a relatively directionless start to the session with the Stoxx 600 set to close the week out with modest gains of around 0.4%. Macro updates have been particularly sparse thus far with today’s data docket also relatively light (highlights include US JOLTS and Uni. of Michigan sentiment). The handover from the APAC region was a predominantly positive one as Japanese equities benefited from favourable currency dynamics and Chinese markets focused on the fallout from Singles Day which saw record sales for Alibaba and Stateside, futures are also relatively directionless (ES -0.1%) ahead of aforementioned US data points and Fedspeak from NY Fed President Williams (voter), who will be speaking on heterogeneity in macroeconomics. The latest BofA Flow Show revealed USD 7.3bln of inflows for US equities, whilst tech stocks saw outflows of USD 1.6bln; the largest outflow since June. In Europe, equities saw their largest outflows in seven weeks with USD 1.7bln of selling. In a separate note, BofA projects 10+% of downside by early next year for European stocks amid weakening growth momentum and rising bond yields. Sectors in Europe are mixed with outperformance seen in Personal & Household Goods with Richemont (+8.6%) shares boosted following better-than-expected Q3 results. LVMH (+1.4%) also gained at the open following reports that the Co. could consider opening duty-free stores in China. Telecom names are firmer with Deutsche Telekom (+2.6%) one of the best performers in the DAX after posting solid results and raising guidance. To the downside, commodity-exposed names are lagging peers with Basic Resources and Oil & Gas names hampered by price action in their underlying markets. FTSE-100 heavyweight AstraZeneca (-4.4%) sits at the foot of the index after Q3 profits fell short of expectations. Finally, Renault (+4.3%) is the best performer in the CAC after being upgraded to overweight from equalweight at Morgan Stanley with MS expecting the Co. to have a better year next year.

Johnson & Johnson (JNJ) is planning to split into two companies. (WSJ)

Tesla (TSLA) CEO Musk sold 587,638 additional shares on November 11th. (Newswires)


DXY - It would be far too premature to suggest that the Buck’s winning streak is over, but having rallied so far in relatively short order some consolidation is hardly surprising, especially on a Friday in between a semi US market holiday and the weekend. Hence, the index is hovering just above 95.000 within a 95.078-266 range after a minor extension from yesterday’s peak to set a new 2021 best, and the Dollar is on a more mixed footing vs basket components plus other G10 and EM counterparts, awaiting the return of those not in on Veteran’s Day, JOLTS, preliminary Michigan sentiment and Fed’s Williams for some fresh or additional impetus and direction.

GBP/CAD - The Pound and Loonie are flanking the major ranks even though the latest retreat in Brent and WTI is pretty uniform from a change on the day in Usd terms perspective, so it seems like Sterling is getting a boost from a downturn in the Eur/Gbp cross ahead of the UK-EU showdown on Brexit and Article 16, while Usd/Cad remains bullish on technical impulses before the BoC’s Q3 Senior Loan Officer Survey. Cable has bounced from just over 1.3350 to retest 1.3400 with Eur/Gbp probing 0.8550 to the downside, but Usd/Cad is probing 1.2600 irrespective of the Greenback stalling.

AUD/JPY - Both fractionally firmer as the Buck takes another breather, though the Aussie is also deriving some traction from favourable Aud/Nzd tailwinds again. Aud/Usd has pared losses sub-0.7300 as the cross hovers around 1.0400, while Usd/Jpy has retreated from around 114.30 towards 1.9 bn option expiries at the 114.00 strike amidst reports that the Japanese Government's economic stimulus package will increase to Yen 40+ tn in fiscal spending, according to the Nikkei citing sources.

EUR/NZD/CHF - The Euro is still hanging in following its close below a key technical level for a second consecutive session and fall further from the psychological 1.1500 mark, especially as better than forecast Eurozone ip has not prompted any upside, However, option expiry interest at 1.1450 (1.2 bn) may keep Eur/Usd afloat if only until the NY cut. Similarly, the Kiwi has not gleaned anything via a decent pick-up in NZ’s manufacturing PMI as Nzd/Usd clings to 0.7000+ status and the Franc remains under 0.9200 regardless of an acceleration in Swiss import and producer prices.

SCANDI/EM - More transitory inflation remarks from Riksbank Governor Ingves are not helping the Sek fend off another dip through 10.0000 vs the Eur. but the Nok is getting protection from weaker oil prices via unusually large option expiries spanning the same big figure given 1.2 bn at 9.7500, 1.7 bn on the round number and 1 bn at 10.2000. Conversely, the Rub is underperforming as tensions rise around the Russian/Ukraine border and the Kremlin aims blame at the feet of the US alongside NATO, while the Try only just survived the latest assault on 10.00000 against the Usd in wake of below forecast Turkish ip and CBRT survey-based CPI projections for year end rising again. Elsewhere, the Mxn is softer following confirmation of a 25 bp Banxico hike on the basis that the verdict was not unanimous and some were looking for +50 bp, but the Zar retains an underlying bid after Thursday’s supportive SA MTBS and with Eskom reporting no load shedding at present, while the Cnh and Cny are holding gains in advance of the virtual Chinese/US Presidential meeting scheduled for Monday.

Notable FX Expiries, NY Cut:

  • EUR/USD: 1.1450 (1.2BLN), 1.1475-85 (601M), 1.1500 (789M), 1.1540-50 (2BLN)
  • USD/CAD: 1.2485-90 (1.6BLN), 1.2510-15 (1.1BLN), 1.2575 (320M), 1.2620-25 (507M), 1.2635-45 (634M)
  • USD/JPY: 113.90 (417M), 114.00 (1.9BLN), 1.1425 (286M)
  • EUR/NOK: 9.7500 (1.2BLN), 10.0000 (1.7BLN), 10.2000 (1BLN)


US Treasuries remain largely side-lined and the curve profile is little changed before welcoming back cash traders from their Veteran’s Day break and looking ahead to Friday’s agenda that may have potential to provide some post-CPI/supply inspiration. However, the price action in European bonds has been more lively as Gilts continue to underperform Bunds or vice-versa and the Eurozone periphery also lags the core and semi-core. Indeed, the 10 year UK debt future has been down to 126.10 (-23 ticks on the day vs +7 ticks at one fleeting stage), while its German peer is nearer the top of its 170.68-32 range in contrast to Italian BTPs and Spanish Bonos that may be more concerned about the ECB tilting more hawkishly in December, or simply suffering an outright and spread correction in similar vein to Gilts after their post-BoE resurgence. Back to what lies ahead, ECB’s Lane, BoE’s Haskel, US JOLTS, prelim Michigan sentiment and Fed’s Williams.


WTI and Brent are pressured in the European morning, experiencing more pronounced downside after a gradual decline occurred in APAC hours. However, the magnitude of today’s performance is comparably minimal when placed against that seen earlier in the week and particularly on Wednesday; in-spite of the earlier pronounced movements, benchmarks are currently set to end the week with losses of less than USD 1.00/bbl – albeit the range is in excess of USD 5.00/bbl. Newsflow this morning has been minimal and thus yesterday’s themes remain in-focus where a firmer USD likely continues to factor but more specifically COVID-19 concerns, with Germany’s Spahn on the wires, and geopolitics via Russia drawing attention. On the latter, tensions are becoming increasingly inflamed as the US said they are concerned that Russia could attack Ukraine and in response Russia said they are not a threat to anyone, but, says US military activity is aggressive and a threat. Moving to metals, spot gold and silver are softer on the session, but remain notably firmer on the week given the CPI-induced move. On this, UBS highlights the risk of additional inflation strength next year which could stoke further gold demand. Elsewhere, base metals are, broadly speaking, marginally softer given tentative APAC performance and the aforementioned COVID concerns, particularly those pertinent for China. In terms of associated bank commentary, SocGen looks for copper to average USD 9.2k/T and USD 8.0k/T in 2021 and 2022 respectively.

COP26 draft calls for a phase-out of unabated coal development, a phasing out of inefficient fossil-fuel subsidies. (Newswires)