Another big option expiry quadruple witching day
To Recap : FED was dovish clerly signalling cuts are coming in JUne 2024 (dop plots have total of 75bps in cuts, market has twice has much already priced in), Norges hiked 25bps, SNB, BoC trying to balance the risks of over-tightening, BoE and ECB stood pat, market trimmed wagers after Lagarde said officials didn't discuss cuts at all (''strong domectis price pressure??? really?? see PMI), the ECB hasten the end of its PEPP investments though, hawkish BoE warned of a 'way to go' on price pressures
And here we are aleady.. : Villeroy: Next ECB move should be a cut, but first 'enjoy' the plateau
Citi's Andrew Hollenhorst: The Fed's "bringing-forward of rate cuts is an indication of the difficulty in attempting to fine-tune policy to achieve a soft-landing, not an indication that one has already been achieved (as markets are pricing)."
Manhattan rents fell for the first time in over two years, as the supply of empty apartments grew and renters held out for price cuts >>> welcome news for core CPI watchers (shelter)
Hungary blocks €50bn of EU budget funds for Ukraine hours after agreement is reached to open membership talks (Hungary will have presidency at the end of 2024..)
China’s move to pump a record amount of cash ($112bn) into the economy coincided with renewed support for the property sector, sending a more powerful stimulus message to investors after piecemeal approaches had left them disheartened
Bundesbank’s Forecast for Germany: Inflation in Germany on the decline but no all-clear yet. Bundesbank expects HICP rate of 6.1% for 2023. Set to fall to 2.7% in 2024, 2.5% in 2025 and 2.2% in 2026 (and sloowgrowth=stagflation like)
Markets :
USD lower, given divergence from CB expectations (of course the FED hiked earlier than most and hiked more, so they would be the one cutting first...)
U.S bonds have had one of the biggest short-term rallies....ever
Rates : the danger here is as CB's turn dovish, the market has ALREADY done a lot fo the ground work and priced in 1.5% of cuts for next year from FED, ECB and BoE (not quite)
The small-cap Russell 2,000 made a new 52-week high today after hitting a 52-week low just 48 days ago (huge change in rates..)...nearly 50% of SPX components have an RSI greater than 70, most overbought in at least a decade, rotations continue into year-end!!, value shoudl do well if not much better, catch up coming
PALL up nearly 20% this week driven by Fed pivot and Russian disruption threats
XPT chart looking increasingly like breaking up, we stay long (low cost of prod etc)
GS's HF VIP vs most short index is down sharply last few weeks, SHARPLY! chart available
And BoE was still hawkish...
This week, the Middle East hosted the 28th annual United Nations Climate Change Conference, commonly known as COP28. Despite disputes about the language used in the final agreement, global banks were still optimistic about the future of climate-related investment themes.
XPT long -term - cost of production around $900... hold!
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