MACRO MORNING NOTE DECEMBER 29, 2017
SBA’s Alastair Williamson concludes the Macro Morning Note from Baltimore, Maryland
Global stock markets are mixed on the final trading session of 2017 with most indexes set for yearly gains on the back of an impressive central bank open market operations.
Starting in Europe: DAX -.38% at 12,932, CAC40 flat, IBEX35 -.36% AT 10,056, and UK100 +.35% at 7,654. The EUR/USD prints higher tagging 1.19795 after a dollar decline probing 92.35. The dollar risks a much larger downward move if the low 92 handle is violated, this could result in an 87.50 projection. For the most part, the US reflation trade has stalled with the US10Y at 2.428 and the traders go long bonds. The 2s10s yield curve continues to flatten, signaling much uncertainty, despite the VIX crush as traders ignore risks.
Most Asian markets finished with gains. Japan’s Nikkei225 finished flat at 22,764 with a stronger Yen. China’s Shanghai Composite Index added +.30% at 3,307. Hong Kong’s Hang Seng index gained +.20% to 29,919, but Australia’s ASX200 declined -.40% to 6,065. South Korea’s markets observed a holiday.
#China's overnight treasury #bond repo rate on #Shanghai Stock Ex surged for the 3rd day in a row, climbed to 17.7% on Thursday after hitting 24% at one point, highlighting a cash squeeze at the end of the year.#PBOC refrained from #OMO today for the 5th day in a row. pic.twitter.com/xEifpk8kc9
— YUAN TALKS (@YuanTalks) December 28, 2017
In a morning note, Mizuho Bank Ltd. said, “markets have been disturbingly sanguine about risks.”
In commodities, WTI edged over the 60 handle, now well over 40% gains from summer 2016. Central Banks are desperately trying to force a continued commodity cycle to get the global synchronized growth narrative ready for 2018. The latest target has been copper advancing +13% in weeks to 3.30 level, but now fading. NatGas is up +15% from 12-21 on higher demand in the United States following a cold spell on the East Coast. Precious metals have been in constant bid post the rate hike earlier this month.
Upward commodity cycle Central Banks are trying to force
GSCI Index: Precious Metals, Industrial Metals, & Energy (weekly)
Dollar crushed overnight
Short timeframe, SPX500 attempting another short cover
SPX500 continues to rid the upper band BB
US Events Calender
Why isn’t UST10Y following copper/gold ratio higher?
Linear system in global stocks produced by Central Banks will at some point break
SPX500 verse BDI
Internal weakness of SPX500
SPX/VIX Ratio at extremes
If s2 92.01 violates, then 87.50 S3 is downside projection for the US Dollar.
Over +40% advancement with R2 60-62 resistance. All we’re waiting for his an unfair high. Central Banks are targeting commodities to further the global growth narrative into 2018.