MACRO MORNING NOTE November 21, 2017

SBA’s Alastair Williamson concludes the Macro Morning Note from Baltimore, Maryland. 

Global stock markets are risk-on this morning with Europeans ripping up S&P futures at 4am. The reflation trade is higher with the dollar in the low 94-handle and UST10Y printing at 2.358. Precious metals took a whack yesterday after a large market overseer(s) dumped billions of gold and silver contracts in a market order in attempt to suppress recent upward trends. WTI bounces back slightly—channeled in the 55-56 range.

Asian markets moved higher following slight gains from Wall Street. It will be a short week for the US with markets closed on Thursday. In Australia, the ASX200 closed up +.3% to 5,963 with the financial sector leading the charge. Base metals with copper were higher and WTI was marginally up which also helps the commodity rich region. In Japan, the Nikkei225 closed higher +.7% at 22,416 with USD/JPY at the midpoint of the 112 handle. Over in South Korea, the KOSPI closed flat at 2,530. Most headlines of Korean tensions are not in news flow.

Over to China, the Shanghai advanced +.55% to 3,411 and Hong Kong’s Hang Seng added +1.22%. The Shanghai has formed a v-shape recovery from a 3-4 session rout but outlines where the weakness resided in the region. Regional government yields are higher with the CN10Y at 3.960. PBOC stabilization since October is maintaining.

As a whole, world stocks gain this morning besides regional stock markets in Europe open mix. The EUR/USD hit a 8 day low against the sterling as the political crisis in Germany weighed on markets. The DAX +.55% at 13116, IBEX35 +.15% at 10,041, and UK100 flat at 7,399. The EURO moved lower after news developed on Monday that Merkel’s efforts to form a coalition government failed, and inducing political instability in the region. In response, Merkel said she would prefer new elections leading a minority government.

“The events have already been likened to Germany’s Brexit-moment,” said Daniel van Schoot, an economist at Rabobank. “That is perhaps exaggerated, but the German political situation is now very unpredictable, more than in the past three decades.”

Europeans ripped up S&P futures around 4am, WTI channeled from 55-56, shorter end of USTYs higher, but longer end fading such as UST10Y and UST30Y…

In Japan, Nikkei225 and USD/JPY attempt to form v-shape dip after recent declines..

Europe opens up with lower regional yields and higher markets.

The stabilization policy in China is very evident

Where is stress developing?

via Zero Hedge,

The UST weakness sent the spread to Bunds back above 200bps…


But the curve just keeps collapsing!!!


Just hammered…

2s10s curve v. Oil

2s10s curve (monthly) death cross signaled

SPY/TLT Ratio (daily) overlaid with 50sma

Libor new high

In a Central Bank driven market Dow Theory doesn’t exist

Ignore this chart perhaps we now know the true reason why monetary policy had to be done


Who do you believe?

Search Term: ‘Sell Stocks’ reaches new highs not seen since 2008