Markets did not like the rise in the ISM manufacturing prices paid (51.3 vs 44.5) and took the 2y UST yields to 5.25pct >>> margins being squeezed, clear risk to earnings lower >>> UST 2year hit 4.92%, SPX500 technically soft through support (Nasdaq, TSLA.. does bit more on rates) and talks of further U.S sanctions on China
BoE's Andrew Bailey signals no pressing need for more UK interest rate rises....GBP reacted as you would expect... >>> RoW see inflation accelerating and Bailey talks dovish..
South Korea's Yoon says Japan has transformed into a partner
The Bundesbank's annual report : In short, financial losses will increase substantially in coming years, but the provisions and other buffers look large enough for now. Nagel: "The burdens from rising rates are likely to increase considerably in the years to come", probably in excess of financial buffers, leading to an outright loss.
Zeroing in on 0DTE: A Trading Tool to Try or a Trigger to Volmageddon?These options contracts that void just hours after they're traded have taken the investing world by storm
China increasingly ambitious with 2023 growth target, may aim for up to 6%
Fed's Kashkari responded to the question about the size of rate hikes, indicating he is open-minded to either 25bp or 50bp, which lends support to our call for a 50bp rate hike in March. However, he also said the March dots are much more important than how much the Fed will raise at the March meeting
Bank of Mexico says inflation taking longer than expected to recede, same story everywhere
Blackstone Blocked Investor Withdrawals From $71 Bn REIT In February
Italy and Germany seek to postpone EU transition to electric cars The two countries want to block EU’s ban on new combustion-engine vehicles from 2035, potentially threatening the bloc's green goals (this is a consequence of tight federal budgets, higher rates and higher costs overall...)
Rare earth miners in China fall Thursday as Tesla said it plans to abandon use of the minerals in its next-generation “magnet” motor due to the health and environmental risks that come with mining: BBG
Billionaire investor David Einhorn says the Fed wants stock prices to go down and will hike rates higher than markets expect (he's all about 'financial conditions' that are still to favorable in his view)
Markets :
Peak US rates now seen near 5.5% - clearly a lot priced in the bond market by now (mortgage demand at 28y lows), 10y UST 4% etc
Asian equities turned lower again, after initial +ve response to China PMI y'day, SPX500 3940 was big on way up, pushed markets to 4150, now rates and inflation higher, we breaking through key supports..Risk is that Bonds have repriced, equity markets haven't done enough. DAX - chart below - only to put things in perspective - we have had a monster rally since Oct 2022
USD remains firm (but not higher), same same, CABLE at risk of breaking down again (dovish BoE), AUDUSD couldn't find much of a bid on positive China growth news (commodities lagging though). Watch out for BoJ (#USDJPY) have a funny feeling they are preparing the ground for some sort of a change, or the market will force them to..
Crude Oil inches up on China rebound, but global demand concerns weigh (commods lagging when everyone is bullish China reopening - that trade already done it seems)
Few days skiing now, sorry folks, need a little bit of quality time with Fam. Back on Tuesday
Seems we are heading for a positive development there, will believe it when I see it !
Good news
Bundesbank taps its risk provisions for 2022 | Deutsche Bundesbank same goes for all CB's let's be honest...Bundesbank recorded a loss of €0.972bn in 2022 due to rising deposit rates for commercial banks & losses on FX securities. Losses were offset by capitalization of reserves. Bottom line: Buba recorded ZERO profit, 3rd year in row Buba has not transferred profit to federal budget.
let's hope so!
Andrew Bailey signals no pressing need for more UK interest rate rises | Financial Times (ft.com) pretty ridiculous dovish stance, while everyone else in the globe is/has to be hawkish
the kind of things investors don't want to see to often!
Subprime car loan delinquencies are surging (axios.com) Low-income households are falling behind on car bills, sadly always the ones to suffer first
Housing Crash: Mortgage Applications Fall to Lowest in Nearly 30 Years (businessinsider.com) hardly a surprise with rates up here!
Rivian lost $5bnlast year, forecast to lose another 4bn this year..nuts
DAX - only to put things in perspective - we have had a monster rally since Oct 2022
have a great day
team pvm
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