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FED Dec still 50bps after FOMC minutes / Claims highest since Aug / USD tumbles / CTA's chasing risk



  • FOMC Minutes : peak usd, peak inflation, peak 10y yields confirmed), A "substantial majority" of Fed policymakers agreed it would "likely soon be appropriate" to slow the pace of interest rate hikes, the meeting minutes showed. Traders had expected the Fed minutes would affirm officials' softening stance after recent data showed a moderation in economic conditions >>> Powell speaks on 30th Nov - if he is not happy about easier financial conditions, he has an opportunity to say something then

  • BoC Gov Maclem says expects policy rate will need to rise further

  • And the U.S is in contraction Mfg PMI 47.6, Exp. 50.0, Last 50.4 Services PMI 46.1, Exp. 48.0, Last 47, Initial jobless claims hit the highest since mid-August as well.. In Japan, Nov factory activity shrank at quickest pace in 2 years

  • Sunak backs down against BoE and ditches call-in power over City regulators

  • Korean CB hikes by only 25bps, growth to slow down sharply in 2023 (they were 1st major CB to hike in Asia in the cycle, another sign-confirmation of peak rates)

  • Foxconn offers $1,400 payout to quell protests at China iPhone plant, Apple supplier apologises for ‘technical error’ after violent clashes between workers and police

  • Renault is buying solar power from Voltalia over 15 years in what is France’s biggest renewable corporate power-purchase agreement


 

Markets :

  • SPX500 levels remain the same - see below comment from GS on CTA's activity!

  • The price of Crude Oil is now, let's call if FLAT over 2022.... and energy stocks are up 65pct..

  • USDollar took a very decent tumble post FOMC minutes (LOW liquidities ahead of Turkey day).. EURUSD 1.0430+ key, USDCHF below 0.9450 area again, USDJPY 139 and below big statement, CABLE 1.2020+ all need to hold to keep USD bears in charge (USDCNH lagging on new covid cases), AUDUSD bullish as long as 0.6675+, and as noted recently the KIWI bird is flying

  • GOLD has room for higher into year-end, tech levels towards 1850$ should be tested, PLAT also interesting, while XAGUSD 22+ would be very interesting for the bulls!

  • Germany bond market sending recession alarm too, 2s/10s yield spread – inverts most in about 30years, now -22bp

  • UST's and rates in general, we looked for and got for #peakrates, meaning higher for longer, not necessarily looking for any cuts in 2023, until, and only until employment and inflation ease quite a bit, we are getting NFP and U.S CPI ahead of next meeting, market remains fixated and cemented on 50bps for next meeting, things could change dramatically though in early 2023, U.S CPI could see some pretty large correction lower

 

Can CTAs help us overshoot?

Goldman writes that medium term CTA momentum is back in positive as we are above the 3965 level. They projected "$6b of S&P to buy in flat tape over next 5 trading sessions but that number will grow meaningfully post today’s close". Longer term momentum flips at 4054. They also write: "Another key technical level to keep up on your screens in 200dma of 4062. Would not be surprised if mkt makes a run towards 200dma tomorrow but will be difficult to break through it."


Mikael Sarwe on Twitter: "🇺🇸 Core PCE consensus above target the foreseeable future & yet market discounts 125 bp cuts mid-23 to mid-24. Lower yields, weaker USD, higher equities & tighter credit spreads since Fed meeting = fin conditions easier than normal. Are markets forcing Fed back to 75 bp in Dec? https://t.co/0rVU5A1ToF" / Twitter

as per above comment, that is what I am referring to, as long as inflation does not come down, market maybe a little ahead of itself and/or you can say that a lot is ALREADY price in for 2023/24 in terms of cuts


Christophe Barraud🛢🐳 on Twitter: "🇩🇪 German Bond Curve Inverts Most in 30 Years in Growth Warning - Bloomberg *Link: https://t.co/CnC3mom0cm https://t.co/oZ2b4CsSGZ" / Twitter


Shares rise, U.S. Treasury yields drop as Fed minutes suggest slower rate hikes (yahoo.com)


Half of variable mortgage holders with fixed payments have hit trigger rate: BoC - National | Globalnews.ca Hitting a trigger rate means a mortgage holder is no longer paying down any principal on their loan and is only covering interest — a key point that can prompt the lender to force a homeowner to make additional payments


Credit Suisse Craters To Record Low After Revealing Staggering $88 Billion Bank Run | ZeroHedge yeps...


Sunak backs down to BoE and ditches call-in power over City regulators (cityam.com) quite right - do not mess with your own CB (or any CB for that matter)


South Korean central bank slows rate hikes, sharply downgrades 2023 growth - CNA (channelnewsasia.com)


Revealed: Tory peer Michelle Mone secretly received £29m from ‘VIP lane’ PPE firm | Michelle Mone | The Guardian unreal


china: China expands lockdowns as COVID-19 cases hit daily record - The Economic Times (indiatimes.com)

Foxconn offers $1,400 payout to quell protests at China iPhone plant | Financial Times (ft.com)

China expands lockdowns as COVID cases soar to daily record high | World News | Sky News some pretty unreal scenes out there, folks unhappy to be locked down... can you blame them?


Voltalia signs a 350 megawatt solar power supply contract with Renault Group to support its energy transition (yahoo.com)


have a great day

Team PVM




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