The "monitoring" of international developments was interpreted as somewhat dovish - although depending on how one looks at it, this could just be wishful thinking. Nevertheless the euro and treasuries rallied.
We begin with the statement from the Federal reserve. Here is a summary interpretation from Natixis.
Source: Natixis
The "monitoring" of international developments was interpreted as somewhat dovish - although depending on how one looks at it, this could just be wishful thinking. Nevertheless the euro and treasuries rallied.
Gold, which has been moving higher this year, also jumped on the news.
Source: barchart
US equity markets on the other hand were disappointed that the Fed didn't go far enough, not taking the March rate hike off the table.
Source: barchart
Crude oil was actually higher as stories spread that Russia can't take it anymore and is pressuring the Saudis/OPEC to implement some production cuts. It's hard to see this working however with Iran being adamant about ramping production.
Source: FT
Thus we had some divergence between crude oil and equities.
Regarding this correlation between oil and stocks, here are the results of the Daily Shot survey (about 1k responded). Thanks everyone for participating.
By the way if anyone is interested in what went into the "other" category, here is a sampling (in alphabetical order). Some responses are quite funny.
Staying with the energy markets, here are the latest developments.
1. We hit a new high on US crude oil in storage (almost 500 million barrels).
2. Moreover, gasoline inventories touched record highs. The fundamentals for crude remain terrible.
3. US crude oil production is still hovering above last year's. Incredible ...
4. US consumers are benefiting from lower energy prices and warmer weather. While the media focuses on gasoline prices, this has to add some cash to struggling households.
5. Here is how low energy prices are impacting employemnt in oil and non-oil states.
Source: @NickatFP, GS
6. The Saudi riyal remains under pressure as the 12m FX forward shows devaluation bets. Will this force the Saudis to begin discussions on production cuts? Perhaps.
Source: Natixis
7. Here is the inflation-adjusted WTI crude oil price.
Source: Deutsche Bank
Turning to China, here is the latest.
1. The Shanghai Composite is moving lower again.
Source: Yahoo Finance
2. On the other hand, steel prices in China are higher (although still extremely depressed relative to historical averages). Some are hoping this is related to fiscal stimulus. Perhaps.
Source: barchart
3. China's productivity has been declining and the Conference Board measure seems to be significantly worse than the official numbers. With labor force increases constrained (as population ages), this will dampen the GDP growth.
Source: Macquarie Capital
4. China's real estate construction investment growth has been slowing sharply - spooking some investors in the process.
Source: @vexmark, @business, h/t Jake
5. One positive development in China's economy has been the nation's auto sales. This does not look like a "hard landing".
Source: @DavidInglesTV
Turning to the Eurozone, government bond yields continue to fall. Here is the German 1-year note.
This next one is quite amazing. It's the five-year French government bond yield - moving into negative territory.
Consumer confidence in a number of member nations has been improving. In particular, French sentiment has been surprisingly strong.
Source:Investing.com
And according to the Italian National Institute of Statistics, Italian consumer confidence is now the highest since the late 80s.
Source:Investing.com
These are in contrast with corporate sentiment trends which have been subdued lately.
German housing prices are on the move. When the central bank keeps rates at extreme lows, the liquidity has to go somewhere.
Source: @Fmirw
Elsewhere in Europe, Swedish manufacturing sentiment hits the highest level ever. Is Swedish manufacturing decoupled from the rest of the world or is just too much Absolut?
Source: @anwallstrom
The savings rate in the UK is hitting new lows. Shopping time.
Source: @business
The Canadian dollar bounced some (now above 71 US cents) on a bit of stability in crude oil.
Source: barchart
Staying with Canada for a moment, the regional property market spreads blow out. Here is Calgary vs. Toronto REITs.
Source: Ycharts.com, h/t Credit Suisse
As a side note, below is the "Bubble Index" for some major markets.
Source: @vexmark
In the last item on Canada, here we have US imports percentage from select nations. Going forward we are likely to see Mexico take an even bigger share of the market.
Back in the United States we have a number of developments.
Bloomberg had outlined 5 scenarios with respect to the monetary policy trajectory. Which one is your favorite? - send us a note.
Source: Bloomberg.com, h/t @TimDuy
By the way, in 1997 the Fed ended up doing "one and done" as the Asian Financial Crisis spread. Is this going to be another such event?
Source:@ScottFarnham
The Cleveland Financial Stress Index is now elevated (and rising).
Other indicators also show financial conditions tightening. It's hard to imagine how this is a good environment to continue raising rates.
Source: @jbjakobsen
As a reminder this is what happened to all major central banks who tried to raise rates since the Great Recession.
Source: @sobata416, Double Line
Switching to the housing market, the US house purchase mortgage volume is slowly recovering. It's nothing like it was 10 years ago, but the index continues to grind higher.
Source: Investing.com
Moreover, US new home sales beat expectations.
Source: Investing.com
In particular the new single-family home market is finally starting to show a bit of recovery.
By the way, cash purchases of homes in the US are declining.
Here is why most economists don't see a recession in the US. While the industrial sector has been under pressure lately, it is now a small part of the economy.
Source: BAML
Now we have a couple of updates on commodity markets.
1. Those El Niño driven long sugar bets by hedge funds are not working out so well.
Source: barchart
2. US bacon deflation is over. So much for those WHO cancer warnings...
Source: barchart
3. Lithium demand spikes.
Source: @PlanMaestro
Finally, here are a couple of tech firms that reported earnings last night - after-hours price changes.
1. Facebook
Source: Google
2. Ebay (apparently the strong dollar is not helping here).
Source: Google
Turning to Food for Thought, we have 5 items this morning:
1. Oprah Winfrey tweeted that she lost 26 pounds with Weight Watchers - and immediately made $20 mm in her account.
Source: Google
2. The next US president will have an enormous impact on the Supreme Court.
Source: @adamemccann, h/t Jake
3. The two separate studies sampling the contamination in Flint's water supply differ greatly.
Source: @FiveThirtyEight, h/t Jake
4. Which central bank holds most gold?
Source: @markets, h/t Jake
5. This chart shows the percentage difference in voting rates between those who are 55+ of age and those who are 16-35 years old.
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