Fed to let yields, inflation run; Bank of England to follow

Fresh records for Wall Street, a weaker US dollar, yields higher, volatility crushed: these were some of the outcomes from a dovish Federal Reserve yesterday as the US central bank resolutely stuck to its guns to let the economy run as hot as it needs to achieve full employment. European stocks moved higher in early trade Thursday but worries about vaccinations and Covid cases weigh. The FTSE 100 still cannot yet sustain a break north of 6,800 and is the laggard, declining a quarter of one percent this morning.  

 

Longer dated paper moved a lot as Powell said the Fed would look past inflation overshooting; US 10-year Treasury yields have shot about 10 bps higher today to above 1.72%, whilst 30s are at their highest in almost two years close to 2.5%. Spreads are at their highest in over 5 years. Stock markets liked it – the Dow Jones industrial average climbed 0.6% to close above 33,000 for the first time. The S&P 500 closed within 25pts of 4,000. The Vix fell under 20. 

 

Tracking the move in US Treasuries, gilt yields rose this morning as markets look to the Bank of England meeting to deliver the next dose of central bank action. It will leave interest rates on hold at 0.1% and the size of the asset purchase programme at £895bn. The success of the vaccine programme – albeit now running into some hurdles – has allowed the Bank to take a more optimistic view of the UK economy beyond Q1 2021. At its February meeting the Old Lady said the UK economy will recover quickly to pre-pandemic levels of output over the course of 2021. It expects spare capacity in the economy to be eliminated this year as the recovery picks up. All this really puts the negative rate conundrum on hold – the next move should be up, if not this year certainly next. Nevertheless, Andrew Bailey stressed earlier this week that the BoE is not concerned by rising yields or temporary inflation blips. So today it will be more about what the BoE doesn’t say. Remaining silent on the rise in bond yields could be the cue for sterling. 

 

What did we learn from the Fed and Jay Powell? Chiefly, the Fed is staying its hand and letting the economy run hot. In a nutshell the Fed said inflation will overshoot but not for long; yields are moving up as part of the cycle as growth improves; and it won’t stop until full employment is achieved along with inflation above 2%. The Fed’s dovishness on monetary policy was contrasted by sharp upgrades to growth and inflation forecasts this year – but the Fed is in a new outcome-based regime focused on absolute employment levels, not on the Philip’s Curve. It also doesn’t really think the sharp bounce back this year is sustainable, meaning now is not the time to remove the punchbowl.

 

Transient: Things like supply bottlenecks and base effects will only lead to a “transient” impact on inflation, according to the Fed. The Fed plans to maintain 0-0.25% until labour market conditions achieve maximum employment and inflation is on course to remain above 2% for a sustained period. A ‘transitory’ rise in inflation above 2% as is seen happening this year does not meet criteria to raise rates. This is where things get dicey vis-a-vis yields since inflation could get a bit big this spring which would pressure (the Fed is immune so far) for hikes sooner. I think also the Fed should be looking around a bit more about where there is clear inflationary pressures and have been for some time, like in asset prices.

 

Stick: It seems abundantly clear that Powell and the Fed see no need and feel no pressure to carry out any kind of yield curve control or Twist-like operation to keep a lid on long-end rates.  This is a steepener move and the market reaction was plain as we saw longer-end yields rise just as the yield on shorter-dated maturity paper declined at first. The 5s30s spread widened around 9bps to 1.66%, whilst 2s10s widened 7bps to 1.5%. 

 

Patient: Is it time to start talking about talking about tapering? “Not yet” came the reply. Which matches expectations – any talk of tapering will not be allowed until June at the soonest when the Fed will have a lot more real data to work with post-vaccinations. That will be things get harder for the Fed as inflation starts to hit. 

 

Outcome-based: Focus on ‘actual’ progress rather than ‘forecast’ progress. This tallies with what know already about the Fed taking a more outcome-based approach to its policy rather than relying on Philip’s Curve based forecasts. The Fed’s rear-view policymaking will let inflation loose. It also means the dots are kind of useless, but nonetheless the lack of movement on dots kept shorter dated yields on a leash, pushing real rates down. The question about what actually constitutes a material overshoot on inflation and for how long it needs to be sustained will be dealt with another day, with Powell admitting the Fed will have to quantify this at some stage. 

 

SLR: Powell kept his cards close to his chest and only said something will be announced on SLR in the coming days. This may involve some kind of soft landing for the exemption to lessen any potential volatility.

 

Long end yields moved higher with curve steepeners doing well. I expect bond yields and inflation expectations to continue to rise over the next quarter – the Fed remains behind the market but this time, crucially, it doesn’t mind. Whilst Powell said the Fed would be concerned by a persistent tightening in financial conditions that obstruct its goal, the difference this time is that stock market stability is not what the Fed is about these days. Post 2008, the Fed fretted about market fragility since that is what caused the recession. Now it’s comfortable with higher yields and won’t be concerned if the stock market is lower from time to time.

 

With the long end of the curve anchored by the Fed’s dovishness, and longer-end yields and inflation expectations moving up, this creates better conditions for gold to mount a fresh move higher, but it first needs to clear out the big $1,760 resistance. MACD bullish crossover on the daily chart below is encouraging for bulls.

Gold needs to clear out the big $1,760 resistance.

Fed quickfire: Dollar trashed, stocks jump

Stocks jumped to highs of the day before paring gains as they were cheered by what looks on to be a dovish Fed decision – critically it looks as though the Fed is happy to let the economy run really rather hot and won’t intervene. It’s truly remarkable that the Fed can say the economy will rebound by 6.5% this year and not change policy. Even with growth in excess of 3% in 2022 and 2% in 2023; it still sees no need to tighten policy. This reflects what we know already about the Fed’s view on employment and inflation, but it is no less remarkable for it. I would have expected more policymakers to move their dots in a bit, but the median plot did not move into 2023. Doves rule – there is not enough of majority yet seeing any need to act to raise rates. Over to Jay Powell.

  • No hikes through 2023. 4 from 1 see a hike in 2022, whilst 7 see a hike by 2023
  • Inflation is seen at or above 2% through 2023, including 2.4% this year, 2% in 2022 and 2.1% in 2023. This is perhaps a little light and if inflation starts to move significantly higher than this it will be a problem and yields could back up further. This is the primary risk now for the Fed as AIT lets inflation expectations become unanchored.
  • Boosts GDP forecast to 6.5% in 2021 from December’s projection of 4.2%, with expansion seen at 3.3% in 2022 and 2.2% in 2023.

The Fed boosts GDP forecast to 6.5% in 2021 from December’s projection of 4.2%

Initial market reaction showed a pop in stock markets – this may get cooled if the market thinks the Fed is losing its grip on inflation by letting the economy run so hot. The Dollar dropped sharply and has held the losses. Gold broke above $1.740. 10s trade more cautiously around 1.66%, still up over 4bps today.

The Dollar dropped sharply and has held the losses.

Dots: no shift in the median: 4 of 18 see a hike next year, 7 in 2023.

Dots: no shift in the median

December dot plot – just three moved into the 2023 camp.

December dot plot – just three moved into the 2023 camp.

La settimana che ci aspetta: Importanti decisioni della Fed e della Banca d’Inghilterra, e i dati sulle vendite al dettaglio negli USA

Questa settimana potrebbero essere prese importanti decisioni sui tassi su entrambe le sponde dell’Atlantico durante le riunioni della Banca d’Inghilterra e della Federal Reserve statunitense. Avremo anche un colpo d’occhio sulla ripresa economica negli Stati Uniti con il rilascio dei dati sulle vendite al dettaglio. La ripresa di gennaio è stata un colpo di fortuna o stiamo assistendo al ritorno di una crescita sostenuta?

La decisione sui tassi della Banca d’Inghilterra: è improbabile che cambi ma le prospettive post-budget sono variate

Si prevede che i tassi di interesse e l’inflazione saranno nuovamente al centro dell’attenzione quando la Banca d’Inghilterra rivelerà la sua ultima decisione sulla politica monetaria questa settimana.

L’obiettivo è ancora un’inflazione al 2%, ed è probabile che resterà in vigore il tasso bancario dello 0,1%. A febbraio, in occasione dell’ultimo importante incontro sui tassi della Banca d’Inghilterra, i membri del Comitato di Politica Monetaria (Monetary Policy Committee, MPC) della banca hanno votato all’unanimità per mantenerlo in vigore.

Venerdì 5 marzo, parlando a un evento della Resolution Foundation, il governatore Andrew Bailey ha affermato che la Banca non aumenterà i tassi di interesse in relazione a una rapida ripresa dell’economia, sostenendo che servirebbero “prove reali” sul fatto che l’inflazione al 2% sarebbe sostenibile prima che un qualsiasi rialzo dei tassi venga implementato.

Tuttavia, il governatore Bailey ha anche affermato che la Banca d’Inghilterra si sta preparando a tassi di interesse negativi qualora la ripresa fosse deludente. Essa si sta anche preparando nel caso in cui la spesa causata dalla pandemia di Covid-19 dovesse portare ad un aumento della pressione inflazionistica.

I mercati non si aspettano che i tassi negativi entrino presto in vigore. Al contrario, secondo il Financial Times, è previsto che nel 2022 la Banca d’Inghilterra aumenti i tassi di interesse.

Anche le previsioni sono state rimodulate per essere in linea con il budget supportato dagli stimoli del Cancelliere Rishi Sunak. Secondo Bailey, tali previsioni appaiono più forti, poiché il nuovo budget che prevede una spesa elevata dovrebbe aiutare a stimolare l’economia e il mercato del lavoro, portando la disoccupazione al di sotto del livello del 7,75% precedentemente previsto.

“La nostra ultima previsione era stata pensata prima del budget”, ha detto Bailey, aggiungendo che nella prossima previsione di maggio “avremo un tasso di disoccupazione più basso nel breve termine e probabilmente più basso in generale”.

In sostanza, la Banca d’Inghilterra guarderà al futuro come sempre, ma è improbabile che cambi il suo tasso di base dal suo attuale 0,1% durante la sua riunione di questa settimana.

La conferenza stampa del FOMC – in arrivo bastonate o un cambio di rotta?

Dall’altra parte dell’oceano si terrà la riunione del Federal Open Market Committee (FOMC). Sarà più o meno la stessa storia della riunione della Banca d’Inghilterra, ma con una piccolo cambio di direzione, forse in senso letterale.

La settimana scorsa il presidente della Fed Jay Powell era stato ottimista riguardo ai rendimenti, e aveva promesso di mantenere la politica stabile, nonostante i suoi commenti abbiano innescato una svendita del debito del tesoro a lungo termine.

Powell ha detto che la banca centrale dovrebbe essere “paziente” nel togliere il suo sostegno alla ripresa, dato che il mercato del lavoro è rimasto lontano dall’obiettivo della banca centrale che aveva previsto una piena occupazione e che in realtà ha compiuto pochi progressi negli ultimi mesi.

Cosa significa tutto questo prima della riunione del FOMC? La CNBC riferisce che potrebbero essere apportate alcune modifiche tecniche alla politica monetaria esistente della Fed, stimolata dalle recenti turbolenze nei mercati obbligazionari.

Una potrebbe essere la reintroduzione dell’operazione Twist, in cui la Fed vende titoli a breve termine e acquista obbligazioni a più lunga durata. L’obiettivo è spingere verso l’alto i tassi a breve termine e abbassare quelli a più lungo termine, rendendo così piatta la curva dei rendimenti. La Fed ha utilizzato questa tattica per l’ultima volta circa dieci anni fa durante la turbolenta crisi del debito europeo.

Un’altra opzione che la Fed potrebbe esplorare sarebbe quella di aumentare il tasso pagato sulle riserve per coprire le emissioni del mercato monetario, aggiustando anche il tasso sulle operazioni dei pronti contro termine overnight nel mercato obbligazionario.

Le prospettive per l’economia statunitense si sono un po’ riaccese grazie al rallentamento dei casi di Covid, all’aumento delle vaccinazioni e all’approvazione da parte della Camera del pacchetto di stimoli del presidente Biden. Il mese scorso i nonfarm payroll hanno mostrato un aumento sostenuto dei posti di lavoro aggiunti all’economia statunitense, con una crescita di 379.000 unità.

Ma bisognerà affrontare il discorso legato ai rendimenti obbligazionari, soprattutto perché il Tesoro statunitense ha bisogno che le sue prossime aste obbligazionarie abbiano buoni risultati. Probabilmente la Fed continuerà ad acquistare i suoi 80 miliardi di USD di titoli del Tesoro, utilizzandoli per acquistare obbligazioni per una durata di quattro anni e mezzo, secondo la CNBC, semplicemente perché sta arrivando una grande offerta aggiuntiva di stimoli, e dovrà aumentare il capitale per far fronte a un potenziale deficit di 2,3 bilioni di USD.

Sebbene non sia previsto alcun cambiamento importante, è possibile che vedremo le modifiche tecniche sopra menzionate. Saranno i rendimenti obbligazionari a dominare la scena, come accaduto nelle ultime due settimane.

Le vendite al dettaglio negli USA: una terapia economica al dettaglio?

Questa settimana verranno resi noti gli ultimi dati sulle vendite al dettaglio negli Stati Uniti. Sarebbe una buona notizia per l’economia statunitense se la tendenza al rialzo registrata a gennaio continuasse.

Secondo l’US Census Bureau, nell’ultimo rilascio dei dati di vendita al dettaglio, le vendite erano aumentate del 5,4% con la crescita più alta registrata da 7 mesi a questa parte. La cifra ha superato le previsioni, con un lieve aumento dell’1,1% ed è aumentata del 7,4% rispetto a gennaio 2020.

Ci si aspetta che alla base dell’aumento della spesa al dettaglio nel mese di gennaio ci siano gli assegni destinato allo stimolo dell’economia. I cittadini americani hanno ricevuto 600 USD direttamente dalle casse del Tesoro, e sono in arrivo assegni ancora più corposi, poiché il pacchetto di stimoli del presidente Biden è stato approvato dalla Camera.

Sul lungo periodo, i venditori prevedono che il 2021 sarà un buon anno per il settore. Si prevede che stimoli e vaccini avranno un impatto reale sul settore, soprattutto se quest’anno si vedrà una strada che ci porterà fuori dal tunnel dei lockdown.

Il totale delle vendite al dettaglio potrebbe aumentare fino all’8,2% nel corso dell’anno per raggiungere oltre 4,33 bilioni di USD nel 2021, dal momento che sempre più persone stanno ricevendo il vaccino contro il COVID-19 e grazie anche alla riapertura dell’economia, come ha affermato la National Retail Federation (NRF) a febbraio. I porti si stanno quindi preparando a un picco nelle importazioni di beni di consumo.

Secondo i dati del Census Bureau, la domanda è aumentata in tutte le categorie chiave: automobili, elettronica, beni ricreativi, negozi di alimentari, materiali da costruzione e articoli per la casa come i mobili. La vendita al dettaglio al di fuori dei negozi fisici, compreso l’e-commerce, è cresciuta dell’11% nell’ultimo periodo in esame, a suggerire che la vendita al dettaglio online continua a guadagnare terreno dal momento che l’accesso ai negozi resta limitato.

Tutto ciò potrà proseguire anche a febbraio? E’ possibile che sia così. Molto dipende da quanto contante gli americani avranno ancora da spendere in beni di consumo e di lusso. Le eventuali forti vendite saranno un buon barometro per giudicare il ritmo della ripresa economica degli Stati Uniti.

 

I principali dati economici di questa settimana

 

Date  Time (GMT)  Currency  Event 
Tue 16th Mar  12.30pm  USD  Core Retail Sales m/m 
  12.30pm  USD  Retail Sales m/m 
       
Wed 17th Mar  All Day  EUR  Dutch Parliamentary Elections 
  12.30pm  CAD  CPI m/m 
  2.30pm  USD  US Crude Oil Inventories 
  6.00pm  USD  FOMC Economic Projections 
  6.00pm  USD  FOMC Statement 
  6.30pm  USD  FOMC Press Conference 
  9.45pm  NZD  GDP q/q 
       
Thu 18th Mar  12.30am  AUD  Employment Change 
  12.30am  AUD  Unemployment Rate 
  12.00pm  GBP  MPC Official Bank Rate Votes 
  12.00pm  GBP  Monetary Policy Summary 
  12.00pm  GBP  Official Bank Rate 
       
Fri 19th Mar  12.30pm  CAD  Core Retail Sales m/m 
  12.30pm  CAD  Retail Sales m/m 

 

I principali rapporti sugli utili di questa settimana

 

Date  Company  Event 
Tue 16th Mar  Volkswagen  Q4 2020 Earnings 
     
Wed 17 Mar  BMW  Q4 2020 Earnings 
  NorNickel  Q4 2020 Earnings 
     
Thu 18th Mar  Nike  Q3 2021 Earnings 
  Enel  Q4 2020 Earnings 
  FedEx  Q3 2021 Earnings 

La settimana che ci aspetta: Le novità sulle richieste di disoccupazione e sulle vendite al dettaglio, e inoltre i verbali del FOMC e gli indici PMI globali

Ci attende una settimana densa di avvenimenti. Per cominciare, saranno pubblicati i dati sulle richieste di disoccupazione negli Stati Uniti, che mostrano quanto sia attualmente grave l’impatto della pandemia sul mercato del lavoro statunitense. Verranno pubblicati anche i dati relativi alle vendite al dettaglio negli Stati Uniti, dopo i deludenti risultati delle festività. Ci saranno anche i verbali della riunione del FOMC e i dati relativi agli indici PMI di tutto il mondo.

Le domande di disoccupazione negli Stati Uniti cresceranno di nuovo?

La pandemia continua a minare le basi del mercato del lavoro. La settimana prossima verranno pubblicati i dati relativi alle richieste di disoccupazione negli Stati Uniti, e se i dati precedenti possono fornire un’indicazione, le prospettive potrebbero essere un po’ confuse.

I dati sulle richieste della prima settimana di febbraio 2021 non erano ancora stati comunicati al momento della stesura di questo articolo, ma possiamo ugualmente ricavare alcuni indicatori su cosa dovremo aspettarci osservando il rapporto sulle richieste di disoccupazione relativo alla settimana terminata il 30 gennaio.

Le statistiche del Dipartimento del Lavoro pubblicate in quel periodo hanno rivelato che sono state fatte 779.000 richieste, contro le precedenti 830.000. Questo dato rappresenta un altro calo, al di sotto delle 900.000 domande, del numero di richieste negli ultimi mesi del 2020, con il tasso di disoccupazione complessivo che si attesta al 6,3% al 5 febbraio.

Tuttavia, sono ancora circa 17,5 milioni gli americani che ancora richiedono una qualche forma di sussidio di disoccupazione. 7,2 milioni sono sotto la Pandemic Unemployment Assistance, che offre un’assicurazione a chi è senza lavoro tra gli operai e ad altri che non hanno diritto a sussidi statali regolari.

I nonfarm payroll, vale a dire il numero di nuovi posti di lavoro aggiunti all’economia statunitense, continuano a restare invariati, e ciò suggerisce che la crescita dell’occupazione è ancora ben lontana da venire.

La disoccupazione non gioverà all’economia. Meno soldi nelle mani dei lavoratori significano una minore capacità di spesa, il che a sua volta significa che c’è la probabilità che le vendite al dettaglio diminuiscano (vedi sotto per maggiori dettagli), e meno denaro girerà intorno all’economia statunitense nel suo complesso, lasciando potenzialmente in stallo la crescita.

Il pacchetto di stimoli da 1,9 bilioni di USD di Biden contiene numerose norme tese ad aiutare le piccole imprese affinché paghino e non licenzino i propri lavoratori. Questo sarà sufficiente? Sembra che il progetto abbia una corsia preferenziale e che possa passare alla Camera, ma i suoi effetti non si vedranno sul breve termine, o finché il denaro non entrerà effettivamente nella disponibilità delle aziende.

Le vendite al dettaglio negli Stati Uniti: un altro brutto risultato?

Questa settimana potremo vedere l’impatto che il Covid-19 ha avuto sul settore delle vendite al dettaglio negli Stati Uniti, con il rilascio di una nuova serie di dati sulle vendite al dettaglio.

Le entrate di dicembre sono scese dello 0,7%, secondo i dati del Dipartimento del Commercio, come riportato da Bloomberg, il che getta un ombra sui risultati di MasterCard secondo cui le vendite del Ringraziamento e di Natale hanno in realtà superato le aspettative.

Tradizionalmente, le festività rappresentano il periodo più intenso per gli acquisti da parte dei consumatori statunitensi. Se si aggiungono il Black Friday e il Cyber Monday, caduti nello stesso periodo, ci si sarebbe aspettati perlomeno che le vendite online avessero avuto dei risultati soddisfacenti.

Inoltre, Amazon ha riferito che il Cyber Monday del 2020 è stato il suo miglior giorno di shopping in assoluto, con vendite in quelle 24 ore che hanno raggiunto i 9,2 miliardi di USD. Anche le vendite del Prime Day hanno superato le aspettative, accumulando vendite per 10,4 miliardi di USD.

Quindi, se Amazon ha vissuto un periodo eccezionale, perché le vendite al dettaglio sono in calo su tutto il fronte? Il lockdown, come è ovvio, sta mettendo in ginocchio i negozi fisici, ma è probabile che sia anche la perdita di posti di lavoro a ridurre il potere d’acquisto complessivo dei consumatori statunitensi. In buona sostanza, le vendite al dettaglio continueranno probabilmente a subire gravi perdite finché la pandemia non smetterà di imperversare.

Bloomberg riferisce che a determinare il calo sono state le perdite dei grandi magazzini, dei ristoranti e di altri punti vendita online non legati ad Amazon.

Gli stimoli saranno d’aiuto? Parte dell’ultimo pacchetto di stimoli del presidente Biden consistono in assegni individuali da 1.400 USD, che potrebbero indurre i cittadini americani a spendere un po’ di più in beni non essenziali.

Ma fino a mercoledì prossimo, quando le cifre di gennaio saranno rese pubbliche, non sapremo come stanno davvero le cose.

Il FOMC pubblica gli ultimi verbali delle sue riunioni

Un paio di settimane fa, il Federal Open Markets Committee si è riunito per la prima volta nel 2021, e le note dell’incontro verranno rese note al pubblico la settimana prossima.

Sappiamo dai rapporti che non è cambiato granché dalla riunione di dicembre: una prospettiva rialzista a lungo termine, determinata dai vaccini e dai pacchetti di stimolo, ma con rischio a breve termine. Anche se gli stimoli e i vaccini stanno tenendo alta la speranza per il futuro, nel presente i problemi relativi alla consegna dei vaccini, oltre alla perdita di terreno del mercato del lavoro, indicano che la Fed probabilmente toglierà il piede dall’acceleratore in merito ad eventuali importanti cambiamenti della politica monetaria.

Si è parlato di inflazione durante la discussione in commissione sulla riduzione degli acquisti di obbligazioni, ma non sembra esserci alcuna indicazione utile a presagire un rapido aumento dei tassi di interesse, anche se la disoccupazione scendesse su livelli che convenzionalmente farebbero suonare campanelli d’allarme sui prezzi.

Janet Yellen è uno dei volti nuovi ad entrare nel FOMC, con il ruolo di Segretario al Tesoro. Neil Wilson, il nostro Analista Capo dei mercati, vede spazio per una dinamica strutturale fiscale e monetaria più coesa con la nomina della Yellen. È in arrivo un passaggio alla moderna teoria monetaria?

Indici PMI: quali sono le prospettive?

La settimana prossima verranno pubblicati anche i dati sugli indici PMI nel Regno Unito, negli Stati Uniti e in Europa, che daranno alcune indicazioni sulla salute dell’economia in queste aree geografiche chiave.

Per l’Europa, le cose non vanno particolarmente bene. L’indice PMI di IHS Markit è sceso dai 49,1 punti di dicembre ai 47,5 punti di gennaio, allontanandosi da quota 50 punti che avrebbe indicato un trend in crescita. Potrebbe essere in arrivo una doppia recessione? Lo stato delle cose nelle principali economie dell’UE, Germania e Francia, mostra segnali diversi. Ad esempio, l’industria tedesca, con le esportazioni in crescita, sta aiutando a mantenere la Germania su una tendenza leggermente in crescita, ma non si può dire altrettanto per la Francia.

Nonostante ciò, non è tutto rose e fiori. Gli indici PMI manifatturieri definitivi di IHS Markit sono scesi a 54,8 a gennaio rispetto al 55,2 di dicembre, anche se c’è stato un ritocco leggermente al di sopra della stima “flash” iniziale di 54,7.

“La produzione manifatturiera della zona euro ha continuato ad espandersi a un ritmo sostenuto all’inizio del 2021, anche se la crescita si è indebolita ai suoi minimi dall’inizio della ripresa, perché i nuovi lockdown e la carenza delle forniture pongono ulteriori sfide ai produttori di tutta la regione”, ha affermato Chris Williamson, Chief Business Economist di IHS Markit, a quanto riporta Reuters.

Nel Regno Unito, l’indice flash PMI è sceso a 40.6 a gennaio, il risultato più basso da otto mesi a questa parte. Questo valore è di molto inferiore al 45,5 previsto dagli economisti intervistati da Reuters, e rappresenta la terza lettura consecutiva inferiore a 50. Nonostante il lancio del vaccino sia uno dei migliori al mondo, il Regno Unito resta in una situazione di lockdown rigido, ed è alle prese con le varianti dei ceppi virali, e sembra che tutto ciò stia ancora avendo un impatto importante non solo sulla salute fisica della nazione, ma anche sulla sua salute economica.

Gli indici PMI manifatturieri di gennaio registrano un aumento della produzione negli Stati Uniti. L’indice flash PMI manifatturiero negli Stati Uniti è salito a 59,1 nella prima metà di gennaio, il massimo da maggio 2007, da 57,1 a dicembre. In precedenza, gli economisti avevano previsto che l’indice sarebbe sceso a 56,5 all’inizio di gennaio. Riuscirà questa tendenza a continuare?

 

I principali dati economici di questa settimana

Date  Time (GMT)  Currency  Event 
Wed Feb 17  7.00am  GBP  CPI y/y 
  1.30pm  USD  Core Retail Sales m/m 
  1.30pm  USD  Retail Sales m/m 
  1.30pm  USD  Core PPI m/m 
  1.30pm  USD  PPI m/m 
  7.00pm  USD  FOMC Meeting Minutes 
       
Thu Feb 18  1.30pm  USD  Unemployment claims 
  3.30pm  USD  Natural Gas Inventories 
  4.00pm  USD  Crude Oil Inventories 
       
Fri Feb 19  7.00am  GBP  Retail Sales m/m 
  8.15am  EUR  French Flash Services PMI 
  8.15am  EUR  French Flash Manufacturing PMI 
  8.30am  EUR  German Flash Manufacturing PMI 
  8.30am  EUR  German Flash Services PMI 
  9.00am  EUR  Flash Manufacturing PMI 
  9.00am  EUR  Flash Services PMI 
  9.30am  GBP  Flash Manufacturing PMI 
  9.30am  GBP  Flash Services PMI 
  1.30pm  CAD  Core Retail Sales m/m 
  1.30pm  CAD  Retail Sales m/m 
  2.45pm  USD  Flash Manufacturing PMI 
  2.45pm  USD  Flash Services PMI 

 

I principali rapporti sugli utili di questa settimana

Data  Company  Event 
Mon 15 Feb  BHP Billiton  Q2 2021 Earnings 
  Michelin  Q4 2020 Earnings 
  Liberty Global  Q4 2020 Earnings 
     
Tue 16 Feb  CVS Health  Q4 2020 Earnings 
  Palantir   Q4 2020 Earnings 
  AIG  Q4 2020 Earnings 
  Yandex  Q4 2020 Earnings 
  Bridgestone  Q4 2020 Earnings 
  Poste Italiane  Q4 2020 Earnings 
     
Wed 17 Feb  Shopify  Q4 2020 Earnings 
  Rio Tinto  Q4 2020 Earnings 
  BAT  Q4 2020 Earnings 
  Novatek  Q4 2020 Earnings 
  Hilton  Q4 2020 Earnings 
  Schindler  Q4 2020 Earnings 
  Garmin  Q4 2020 Earnings 
     
     
Thu 18 Feb  Walmart  Q4 2021 Earnings 
  Airbus  Q4 2020 Earnings 
  Daimler   Q4 2020 Earnings 
  Barrick Gold  Q4 2020 Earnings 
  EDF  Q4 2020 Earnings 
  Carrefour  Q4 2020 Earnings 
     
Fri 19 Feb  Hermés  Q4 2020 Earnings 
  Danone  Q4 2020 Earnings 
  RBS  Q4 2020 Earnings 
  Renault  Q4 2020 Earnings 

 

 

Risk on, dollar lower

  • Risk sentiment buoyed by Fed, stimulus hopes
  • Dollar sinks to fresh lows
  • Priti Patel says UK and EU in ‘tunnel’ negotiations

Solid start: market sentiment appears buoyed by hopes US lawmakers can strike a stimulus deal and Brexit talks are close to a breakthrough, albeit they are still hanging by a thread and the deadline is only two weeks away. European equities traded higher on Thursday, while US futures rallied and looked to open at record highs after the Fed signalled it will stand by the economy and keep the cash taps on.

The Fed will continue to buy $120bn of bonds until “substantial further progress has been made toward the Committee’s maximum employment and price stability goals”. This could be taken as a fairly hawkish statement, signalling the Fed’s readiness to slow the pace of asset purchases as soon as perhaps the middle of next year, by which time policymakers think people will be comfortable heading out. Moreover, the Fed did not expand asset purchases as some had called for, nor did it shift the focus of asset purchases to longer dated debt. However, Fed chair Jay Powell insisted that the Fed would do more if needed and suggested any inflation next year would be transitory. On the whole, this remains a very dovish bias, but policymakers upgraded their near-term economic forecasts. Markets were not unduly responsive to the statement, with the 10-year Treasury holding within the 0.925%-0.95% zone.

US lawmakers are moving close to agreeing a $900bn Covid relief bill that could include $600 stimulus cheques and extended unemployment benefits. Both sides are sounding a lot more optimistic, but there is still some haggling over the finer details to be done before it is signed off.

Home secretary Priti Patel said the UK and EU were in tunnel negotiations. It’s not quite the breakthrough moment we’ve been waiting for since they’ve been some form of last-ditch closed-door talks for weeks. The pound traded higher.

Sterling advanced to make new highs vs the dollar amid swirling reports of progress and deadlock on the Brexit front, however the move seems to be more linked to dollar weakness than a new bout of pound strength. The dollar index broke down to its lowest since Apr 2018 under 90. This helped GBPUSD move clear of its recent highs at 1.3540 to 1.35850 this morning.

The Bank of England meets later and should signal it’s prepared to do more should financial conditions deteriorate in the New Year. The MPC voted through an additional £150bn in QE in November is not in a rush to pull any more strings just yet, particularly given the Brexit uncertainty. Any talk of negative rates will be jumped on by the market, but this should be a fairly quiet affair.

Crude oil prices rose after a big draw on US inventories lifted sentiment and reduced fears of a build-up of stocks ahead of the Christmas period. The draw of 3.15m barrels compared with a huge 15m build in the previous week. Gasoline inventories rose by 1m barrels, but this was less than expected. WTI (Jan) kicked on after the release and moved above $48 where it has held gains.

Stocks weaker post-Fed, Bank of England, OPEC+ meetings ahead

Wall Street fell and Asian equities followed the weak handover even as the Fed stayed very much on script with a dovish lower-for-longer message, whilst also presenting a more upbeat take on the economy in the near term.

The Fed put some meat on the new average inflation targeting skeleton that was sketched out by Jay Powell at Jackson Hole, saying it will aim to achieve inflation ‘moderately above 2% for some time so that inflation averages 2% over time and longer-term inflation expectations remain well anchored at 2%’. But the rub is that it doesn’t see this inflation coming through until 2023 at the soonest.

There were no explicit easing measures to get there sooner, so the FOMC has only really filled in some blanks as to what we already knew, and seems content for now to wait for Congress to sort the fiscal side out before it does anything more. The lack of any real determination to get inflation up sooner seemed to disappoint for risk.

Equities lower after FOMC, dollar catches bid

Equities peaked after the statement and then progressed lower during the presser with Powell right into the close, with the S&P 500 finishing down half of one percent at 3,385, led by a decline in tech, which is about a quarter of the index, whilst energy – now a tiny c2% weighting of the index – rallied 4% as oil climbed.

The 21-day SMA offered resistance and now we are looking again to the 50-day line at 3,335, with futures pointing lower. Meanwhile the Nasdaq finished –1.25% lower with Tesla, Apple, Amazon et al falling, and is likewise trapped between its 21-day and 50-day lines, with big trend line support close. European equity markets took the cue and fell over 1% at the open as the FTSE 100 again tested the 6,000 level.

USD caught a bid as well, with the dollar index lifting from a post-statement low of 92.85 to clear 93.50 overnight, before coming off a touch to 93.30 in early European trade. GBPUSD retreated to 1.2950 having earlier hit the 1.30 level. Gold came off its highs at $1970 to test the $1940 support area.

The Fed sees unemployment at a lower level and a larger economy by the end of the year than it did in June. Real GDP forecast for 2020 was revised down to –3.7% from –6.5% in June. Unemployment is seen at 7.6% compared with the 9.3% anticipated in June. Inflation is seen picking up more than it was in June albeit the rise in breakevens has levelled off at about 1.7%.

The key takeaway from the economic projections is that both core and headline PCE inflation are not seen returning to 2% until 2023 – the Fed even had to add a year to the forecast horizon just to get this in. Given it didn’t manage to get to 2% with unemployment under 4%, there is a lack of credibility around this, even though I for one believe inflation will come through.

The Fed is in the dark and there is no more it can really do without spiralling into the abyss of negative rates. The Fed is in the dark not just because it has no control over inflation, but also because the political situation remains very unclear with regards to fiscal stimulus and the presidential election in November.

So, there is a lot of uncertainty and all the Fed can really do is continue to stress its willingness to do whatever it takes and its willingness to overlook overshoots on inflation should they emerge. I’m in the camp that does expect inflation to feed through due to the massive increase in the money supply combined with supply chain disruption and the fiscal largesse.

The Fed’s policy shift also raises the prospect of inflation expectations becoming unanchored. However, we cannot ignore the fact that the pandemic has had a chilling effect on confidence and spending may be slow to reappear, pushing down on inflation for a while longer.

US data softens, focus switches to jobless claims and Bank of England

US retail sales lost momentum last month, with sales rising just 0.6% versus the 1.1% expected, signalling the effect of the expiration of $600 stimulus cheques that made many at the lower end of the income scale better off out of work than in.

US jobless claims later today will be closely watched for signs of any improvement after last week’s disappointment. Last week’s print of 884,000, which was flat on the previous week, signalled a slow down the recovery in the labour market and worried economists.

The Bank of England delivers its monetary policy statement at midday – will it surprise by going ‘big and fast’ with more QE – as governor Andrew Bailey suggested is the best approach for central banks in times of crisis last month?

There is also speculation that the Old Lady of Threadneedle St will turn to negative interest rates to stimulate the economy. Speaking to MPs recently, Bailey refused to rule out negative rates – a policy that has systematically failed to deliver the required inflation in the Eurozone – saying that it remains in the box of tools.

I’d expect the Bank to tee-up an increase in QE in November and not further rate cuts, but it may choose to fire first and ask questions later.

Snowflake surges on IPO

Snowflake (SNOW) shares made an astonishing stock market debut. After pricing the IPO at $120, the stock flew to almost $280 in the first few hours of trading before settling at $253. The price to sales multiple of about 360 is simply astounding – a lot of future growth was priced into the stock on its first day.  It’s the biggest software IPO ever and demand was exceptionally high, and the multiples being paid even loftier.

It seems to be a story of the scarcity value of growth. It also shows just how much wild, free-flowing money there is in the market right now chasing whatever’s seen as hot and whatever offers the most growth.

We’re almost into the territory of describing these tech stocks as Veblen goods, where demand rises with the price. The IPO market is getting very frothy. We can blame/thank the Fed for this situation with ultra-low rates assured for a very long time and massive liquidity needing to find a home at whatever price that is. It’s like 1999 all over again.

London sees biggest listing in years as The Hut Group IPOs

Even London is getting in on the action with The Hut Group getting its IPO off with a swagger and a close at more than £6 after listing at £5. As noted when the listing was announced at the end of August, the valuation it deserves depends very much on your point of view.

In 2019 THG achieved year-on-year revenue growth of 24.5% to reach £1.1 billion with adjusted EBITDA of £111.3 million. The float aimed to raise £920m at £4.5bn market cap, which at c40x last year’s EBITDA and x4 sales doesn’t seem like too much to pay for this kind of growth….or does it?! The answer rests surely on whether it deserves a techy or a retail multiple.

Management forecast overall revenue growth of 20-25% over the medium term, with its tech platform Ingenuity (the capital-light growth lever) forecast to grow at 40% primarily as a result of increasing mix of e-commerce revenues as global brand owners accelerate their adoption of D2C strategies.

But revenues from Ingenuity remain relatively small – £61m in the first half of 2020, which was flat on last year and less than 10% of total group revenues. As a percentage of group revenues, the contribution from Ingenuity is going down. Again it’s the promise of growth that is appealing to investors right now.

Oil softens after FOMC statement

Elsewhere, oil was a little softer overnight as risk sentiment came off the boil after the Fed, but this came after a couple of very solid days. WTI for Oct breached $40 on the upside before paring gains but the $39.50 area has held for the time being and offered a springboard in early European trade.

EIA data showed inventories fell 4.4m barrels, contrasting with forecasts for a build. Gasoline stocks were drawn down at twice the rate expected. However, we remain concerned about the demand pick-up through the rest of the year – as all the main agencies have recently revised their demand forecasts lower.

We note also a report suggesting that OPEC is not about to panic by further cutting production – however that would depend on prices; WTI at $30 again might induce action. OPEC+ members are holding an online meeting today to assess compliance and whether additional cuts may be necessary – I would think for now they will stand pat, with the focus chiefly on compliance with current targets, which currently stands at 101%, according to sources reported yesterday.

But if prices come a lot more pressure there would likely be an OPEC+ response.

Markets steady before Fed meeting, Hut Group pops as IPO market shines

It’s Fed day: risk sentiment remains broadly positive but the big-ticket event is the Fed policy meeting. US stocks rose Tuesday as the two-day Fed policy meeting kicked off.

Whilst there is relative calm in markets again after the tech-led sell-off produced a correction in the Nasdaq and a 7% decline in the S&P 500, the expectation on the Fed to be very dovish may lead to volatility should the market think the FOMC isn’t offering enough detail on the future path of monetary policy.

The S&P 500 added 0.52% and managed to close above the psychologically significant 3,400 level after running into resistance at the 38.2% retracement of the early September pullback, with the 21-day SMA sitting around 3,426, which may offer a further test for bulls. The Nasdaq added 1.2% as Tesla shares rose a further 7%, extending the rally from Monday’s 12% gain.

Overnight, Tokyo was flat as Yoshihide Suga was elected as Japan’s new prime minister, replacing Shinzo Abe. European equity markets were slightly higher in early trade, though the FTSE 100 dropped.

FOMC preview: what to look for from today’s Fed announcements

There are several things to look out for from the Federal Reserve today, not least some firming up of the details around the new average inflation targeting regime.  After Jackson Hole, there were some unanswered questions for the FOMC.

There was not much in the way of detail of how the Fed plans to deliver the new AIT framework, for instance. And Powell’s speech lacked in any real specifics on the nature of forward guidance that the FOMC is clearly leaning towards – this will be an important lever of the AIT approach, so it needs to be clarified at this meeting.

Should forward guidance be based on a time horizon or specific economic data? Yield curve control has been shelved as an idea by the FOMC but remains an option should it desire. Today’s statement and press conference with Powell will be of great importance to iron out how AIT will be delivered.

Powell stressed that if ‘excessive inflationary pressures’ were to build, or inflation expectations were to rise above levels consistent with its mandate, the Fed ‘would not hesitate to act’. This gives it a degree of latitude down the line should there be a major inflation overshoot, which as noted on several occasions, is a very real possibly if expectations become unanchored.

So far, after rising sharply post the March trough in financial markets, US 10-year breakevens have levelled off, whilst benchmark bond yields have barely budged.

Fiscal stimulus in focus ahead of Fed statement

The Fed is also likely to lean heavily on the need for Congress to come up with fresh stimulus – it cannot do all the lifting here. Whilst a fifth package remains elusive, Nancy Pelosi has signalled that Democrats could delay the October recess in order to get a deal done, with the White House saying the $1.5tn package floated by the ‘Problem Solvers Caucus’ was worthy of discussion.

The Fed has not quite exhausted all its ammunition, but it’s very much in a position where it needs to wait for the fiscal support. Several Fed officials have been talking up the need for fiscal support.

There will also be updated economic projections to watch out for along with the tone the Fed strikes on the economic outlook  – we know the Fed has taken a pretty cautious view of the economy and the loss of momentum in initial jobless claims may be a concern.

Looking ahead to today’s session, US retail sales will also be closely watched and may well show a sharp slowdown after Americans’ $600 stimulus cheques stopped. UK inflation figures earlier this morning showed a sharp drop in CPI inflation to 0.5% in August from 1.1% in July, as the Eat Out to Help Out scheme and the VAT cut on the hospitality industry bit into prices.

Hut Group IPO

Elsewhere, Hut Group shares got off to a lively start on their stock market debut, rising to 650p in what is the biggest IPO in London this year and for several years. As noted when the filing was lodged, after a considerable ramp in tech valuations this year – eg, Ocado +100% in the last 12 months – this IPO looked like a well-timed move, at least on the part of the founder who is due a bumper £700m pay-out should all go well, whilst still remaining very much in control of the business.

The question is whether this 10% margin business deserves a tech rating. A standard listing makes it ineligible for inclusion on the FTSE index although its mooted market cap would be enough just to make the FTSE 100. Any standard listing raises eyebrows as it means no index inclusion and lower governance standards. Arcane incentive schemes and a founder share model are also suspect.

Founder Matt Moulding is also selling £54m of stock despite previously indicating he would retain all his shares. Heavy demand indicates what a tech multiple, zero per cent interest rates and a premium on growth can do for your stock.

Indeed, the IPO market continues to show considerable strength, which does not indicate significant signs of stress in capital markets. Snowflake, a cloud software business backed by Warren Buffett, got its IPO off cleanly at a price of $120, valuing the company at $33bn.

Apple unveiled new products, but investors were underwhelmed by products like the new iPad Air and new watches, with the shares flat on the day and ticking lower by 0.67% in after-hours trading. All investors really care about is the 5G iPhone launch, when it comes.

Oil climbs on back of large inventory draw

Crude oil prices rose after a surprisingly large draw on inventories and have now bounced over 8% from last week’s lows. API figures showed stocks fell 9.5m barrels in the week ending September 11th, much more than the narrow 1.27m barrel draw expected.

EIA figures today are expected to show a build of 2m barrels, which seems rather unlikely in light of the API report. Oil prices firmed despite OPEC and IEA reports this week indicating a slower recovery in demand in 2020 than previously forecast.

Nevertheless, prices look vulnerable to a further pullback as the near-term uptrend runs out of steam and the longer-term downtrend re-asserts itself.

Stocks open higher ahead of busy central bank week

It looks like a second wave, but not as we know it. Even if cases are starting to rise in Britain and elsewhere, deaths are not picking up in the same way as before – younger, less vulnerable people are getting the virus this time it seems.

The World Health Organization (WHO) recorded a record one-day rise in cases globally. France recorded a record number of new infections – some 10k over the weekend. There is not the appetite for blanket shutdowns of the economy again – this is good, but the ongoing fear factor will keep a lid on animal spirits.

And governments could be spooked into heavy-handed responses, even if they don’t want to kneecap the economy.

AstraZeneca resumes vaccine trial

Fear can be vanquished with a vaccine, so it’s good news that AstraZeneca and Oxford University are resuming trial of their vaccine candidate, after it was paused a week ago. News on a vaccine – good or bad- is set to emerge in October, it seems.

Pfizer says there is a good chance it will deliver data from its late stage trials of its candidate vaccine, developed with German drug maker BioNTech. If approved, it could be available to Americans by the end of the year. The question is whether this may be needed – Sweden seems to be showing the way towards herd immunity.

With vaccines and herd immunity, unemployment becomes a much bigger problem. The end of the furlough scheme raises the prospect of employment rates reaching a cliff-edge. Unemployment could spiral and redundancies are taking place at twice the rate of the last recession. US initial jobless claims last week indicated the recovery is slow, even if job openings are more encouraging.

BoE to signal more stimulus this week?

This could make this week’s Bank of England meeting interesting. It has enough ammo in the quantitative easing quiver to last until the end of the year, but with only two more scheduled before 2020 is over, the Bank will need to lay the ground for more stimulus. Governor Andrew Bailey said central banks should go “big and fast” with QE and other stimulus at times of crisis.

If there an explosion in unemployment, this line will be tested. I’d expect the Bank to sound more dovish this week, although it is unlikely to alter policy so far in advance of the November Budget, in which the government show its fiscal hand.

Of course, there is still time for Rishi Sunak, the Chancellor, to extend furlough, as many are urging him to do. UK 2-year gilt yields hit fresh record lows this morning with the market seemingly convinced the BoE will give a very strong signal it is preparing to deliver additional stimulus – most likely in the form of increased asset purchases rather than a descent into a vortex of negative rates.

The problem of furlough schemes and extending them is of course one of productivity and the opportunity cost of maintaining people in a kind of output stasis. Zombie workers and zombie companies are a growing problem. Indeed, new research shows the number of zombie companies in the US is near the 2000 record.

European stocks build on decent week

European markets opened higher on Monday, with the FTSE 100 solidifying above 6,000 and the DAX ticked up to 13,300. This comes after a decent week for European markets that contrasted with Wall Street weakness.

The Nasdaq finished last week down –4%, with the S&P 500 dropping –2.5% over the five days. The Nasdaq broke under its 50-day simple moving average, whilst the S&P 500 traded through it at the lows but held it at the close.

European markets fared better as they were much less exposed to the sell-off in tech – some rotation taking place as investors look to ‘reopening’ stocks over the Covid-19 winners, but it was far from anything significant.

Indeed, in dollar terms, the moves in the FTSE 100 for example were far less impressive. Investors in the US may also be paying attention to the presidential race – Biden’s tax plans would knock earnings, although it’s far tighter race than the national polls indicate. US futures are higher and have cleared the Friday peak struck during the London morning session.

Abenomics safe as Suga elected new leader?

Suga-high for Japanese equities? In Japan, Yoshihide Suga, the former chief cabinet secretary, looks set to replace Shinzo Abe as prime minister after being elected to the lead the country’s ruling Liberal Democrat Party. Suga has pledged to maintain Abenomics and seems to be causing few ripples in the market.

He will only have a year to make an impact though before the next elections are scheduled – he could choose to call a snap election to shore up his support, but the coronavirus might get in the way.

The Nikkei 225 edged up 0.65%, while the yen was steady against the dollar at 106.

M&A activity is rising and there are deals aplenty – TikTok seems to be heading the way of Oracle, whose chairman is a Trump support, whilst SoftBank is offloading Cambridge-based Arm to Nvidia.

Meanwhile Gilead, whose remdesivir antiviral is treating Covid-19 patients, is buying Immunomedics for $21bn. With vast sums of private equity to be deployed, there may be a slew of deals and takeovers as we head into the autumn.

Brexit and Federal Reserve to weigh on cable, gold rangebound

In FX, ongoing talks between the UK and EU look set to be the chief driver for GBP crosses. However, a Federal Reserve meeting this week will impact the USD side of cable. There is not a new to say about the Brexit talks after last week – we await to see whether the discussions can get any further.

Usual headline risks to cable, but GBPUSD could get squeezed higher absent of any negative news. GBPUSD traded at 1.2840 in early trade having made a firm near-term base at the 200-day EMA at 1.2750. Downtrend still in force until the 1.30 handle is recovered.

Elsewhere, gold is still trading in a very narrow range around the $1940 level. US breakevens have come down a bit, US 10s are hunkered in around 0.66% and real rates (10-year TIPS) have just come down a touch.

Remember it’s Fed week. The Federal Reserve convenes on September 15th and 16th for the first time since Jerome Powell signalled that the central bank would be prepared to tolerate higher inflation as a trade-off for a swifter economic recovery and jobs growth.

Unemployment has fallen since the pandemic peak but is not improving quickly enough. The Fed is not expected to announce any fresh policy change but will reinforce Powell’s message from Jackson Hole on the policy shift.

Indeed the main focus for the Fed right now is actually not monetary policy but fiscal as members await any move in Washington to deliver a fresh stimulus package.

Fed minutes waltz away with risk appetite

FOMC minutes are casting a shadow over markets and underline that any recovery is not going to be a straight line of advances. The Fed layered on the risks and caution thick, but didn’t come up with any sweeteners for the market in the shape of more easing.

The US dollar roared back, gold tanked, and stocks are wobbling after minutes from the Federal Reserve’s July meeting left investors a little disappointed. Members clearly backed away from yield curve control and seemed to be in less of a hurry to push for clearer forward guidance.

‘With regard to the outlook for monetary policy beyond this meeting, a number of participants noted that providing greater clarity regarding the likely path of the target range for the federal funds rate would be appropriate at some point,” the minutes said. This use of the phrase ‘at some point’ indicated members are not in a rush to tie rate hikes to specific economic goals. The Fed also noted that most members judged yield curve control ‘would likely provide only modest benefits in the current environment’.

The FOMC meets again in mid-September and will be reviewing the recent economic progress. For now it seems the Fed doesn’t feel the need to go quickly on more explicit forward guidance as the economy is still ‘in’ the pandemic – as long as cases rage we know what the Fed will do. The question comes on the exit – how quickly does the economy need to recover into the autumn for the Fed to feel the need to tie tightening to specific economic goals – the purpose of which would be to keep markets on an even keel.

Equities trip on FOMC minutes

The S&P 500 flirted with 3,400 in the early part of Wednesday’s session but shot 50pts lower after the minutes were released, ending down 0.44% to 3,374.85. The Dow and Nasdaq both tripped up as well. Asian markets fell overnight. European equity indices are taking their cue from this weak handover and dropped over 1% in early trade, before stocks pulled off the lows after China’s ministry of commerce said this morning that US-China trade talks would resume in the coming days. Vix futures are still pointing to increased volatility as we head towards the US election in November.

Apple hits $2tn market cap

Apple advanced to a new record high and became the world’s first $2tn company as it rose above $467 but closed flat at $462.83. There is a lot going on here – some of which is driven by Apple’s business and some of which is due to external factors. Apple has created a brand with immense power, and investors have really bought into the pivot towards Services to generate more sustainable revenues than being a pure play hardware manufacturer.

The upcoming rollout of 5G iPhones is a prime factor, as is its very strong balance sheet. I also think we could throw in the upcoming stock split as a factor as despite the fact it ought not to matter to the share price, it will undoubtedly make it easier for retail investors – a growing crop of US day traders – to buy the shares. Cf Tesla. And it’s a Covid-winner – the thirst for high quality growth has been well documented.

Dollar up, Brexit headline risks could weigh on sterling

The dollar caught a strong bid after the minutes. EURUSD fell from 1.1940 to 1.1840 where it has found support and is pushing off this level to pare some of the losses this morning. Cable also shipped two big figures in the last day and is now under 1.31 with near-term horizontal support at 1.3050. Brexit headline risks remain as trade talks continue this week – update coming tomorrow but we could get wire reports to knock the stuffing out of sterling. Overall if this is a cyclical dollar bear market then we would see this as a temporary blip.

Delivery Hero – a beneficiary of an increase in orders due to the pandemic – has been named the replacement for the disastrous, scandal ridden Wirecard on the DAX. The food delivery company will join the German blue-chip index on Monday. Delivery Hero is on course to deliver one billion orders this year, thanks in large part to the lockdowns.

Another sub-1m print for US jobless figures?

US initial jobless claims today are expected to come in under 1m again, with continuing claims at 15m. Last week’s report showed jobless claims fell under 1m for the first time since the pandemic, but unemployment levels remain exceptionally high and the concern is that temporary layoffs become permanent. The rate of change is not going to improve – the easy wins are behind us and the hard slog lies in front.

EIA crude oil inventories showed a draw of 1.6m barrels last week, while gasoline stocks declined by 3.3m barrels. WTI crude prices nudged up to $43.20 before pulling back as risk assets came under pressure from the Fed minutes. Copper prices broke above $3 for the first time in over two years but failed to sustain the move after the minutes and pared gains.

Tomorrow morning watch for Eurozone PMIs (ignore) and UK retail sales. Sales rebounded 13.9% in June after May’s 12.3% jump, which almost took total sales back to where they were before the pandemic. We know however that these masks huge shifts in how people spend their money. We also know that when furlough schemes end and we get a real increase in unemployment, people will be tightening their belts.

US EIA Oil Inventories Preview: Crude edges higher on surprise API draw

Crude and Brent oil continue to trade sideways today, with crude adding $0.38 and Brent up $0.40 to reclaim around half of yesterday’s losses.

While crude oil has managed to rise above previous long-term resistance at $41, a new ceiling at $42 has quickly been established, and WTI continues to trade within a narrow range. It is the same story for Brent – a break above $44 early last week couldn’t be sustained.

API data surprises with large crude draw

Today’s gains have been prompted by the latest American Petroleum Institute’s crude oil inventories data, which has surprised with a sizeable 6.829 million barrel draw. Analysts had expected to see a mild increase of 357,000 barrels.

While this points to better-than-expected demand, it’s worth noting that last week’s figures revealed a shock build of 7.544 million barrels against expectations of a draw.

Stimulus talk, FOMC meeting limit upside for oil

Also capping gains are delays to the next US stimulus bill. Republicans and Democrats are still debating the measures – Democrats claim they don’t go far enough, but President Trump also has criticisms of the bill.

Oil gains could accelerate on this afternoon’s US crude oil inventories data from the Energy Information Administration. Analysts predict a build, but after the API’s figures we could see the data confirm a large, unexpected draw instead.

Market focus on tonight’s announcement from the Federal Open Market Committee could keep a lid on price action. Traders are expecting the FOMC to reaffirm its commitment to stimulus – the Federal Reserve has already announced that its lending programmes will continue until the end of the year, beyond the original September end date.

However, if policymakers don’t sound as dovish as markets expect this could fuel a rebound for the dollar, which this week hit two-year lows. Dollar strength would put downside pressure on crude and Brent even if the latest inventories data is positive.

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  • Indennizzo agli investitori della FSCS fino a GBP85.000. *a seconda di criteri ed idoneità
  • Copertura assicurativa da £1.000.000**
  • Protezione dal Saldo Negativo

Markets.com gestito da Finalto Trading Limited Regolamentato dalla Financial Conduct Authority (“FCA”) con licenza n.607305

ASIC (Australia)

Prodotto

  • CFD

  • I fondi dei Clienti sono tenuti in conti bancari separati
  • Verifica elettronica
  • Protezione dal Saldo Negativo
  • Copertura assicurativa da $1.000.000**

Markets.com, gestito da Finalto (Australia) Pty Limited Detiene una licenza per i servizi finanziari australiana n. 424008 ed è regolamentata nella fornitura di servizi finanziari dell’Australian Securities and Investments Commission (ASIC”).

Selezionando uno di questi organismi di regolamentazione, verranno visualizzate le informazioni corrispondenti su tutto il sito web. Se vuoi visualizzare le informazioni per un organismo di regolamentazione diverso, selezionalo. Per maggiori informazioni, clicca qui.

**Soggetto a termini e condizioni. Consulta la polizza integrale per maggiori dettagli.

 

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