E Markets: Bad News Bears

  • Eurozone November industrial production fell 1.7% m/m, -3.3% y/y after +0.1% m/m, +1.2% y/y – weaker than -1.3% m/m, -2.3% y/y expected – worst in 3 years. Production of capital goods fell 2.3% m/m, durable consumer goods -1.7% m/m, intermediate goods -1.2%, consumer goods -1% and energy -0.6%. The 3 worst drops by nation were in Ireland -7.5%, Portugal -2.5% and Germany -1.9%. 

Market Recap:

Equities: The US S&P500 futures are off 0.8% after losing 0.01% Friday. The Stoxx Europe 600 if off 0.8% with China trade concerns key, then Brexit. The MSCI Asia Pacific (ex Japan) fell 1% with China trade concerns driving. 

  • Japan Nikkei closed for holiday.
  • Korea Kospi off 0.53% to 2,064.52
  • Hong Kong Hang Seng of 1.38% to 26,298.33
  • China Shanghai Composite off 0.71% to 2,535.77
  • Australia ASX off 0.03% to 5,833.20
  • India NSE50 off 0.53% to 10,737.60
  • UK FTSE so far off 1% to 6,846
  • German DAX so far off 0.7% to 10,814
  • French CAC40 so far off 0.9% to 4,740
  • Italian FTSE so far off 1.2% to 19,049

Fixed Income: Weaker equities, more political doubts, and weaker data – all drive bid to US bonds today. But for EU, the key is periphery with the German Bunds up 3bps to 0.21%, French OATS down 3bps to 0.63%, Italy up 3bps to 2.89%, Portugal off 2bps to 1.69%, Greece up 2bps to 4.30% while UK Gilts are off 3bps to 1.26%.

  • US Bonds bid on equities and safe-haven demand– 2Y off 3bps to 2.52%, 5Y off 3bps to 2.5%, 10Y off 3bps to 2.67%, 30Y off 2bps to 3.02%. 
  • Japan JGBs closed for holiday
  • Australian bonds bid up on China trade– 3Y off 4bps to 1.79%, 10Y off 4bps to 2.27%. 
  • China bonds lower with inflows key– 2Y up 2bps to 2.67%, 5Y up 4bps to 2.94%, 10Y up 1bps to 3.14%. 

Foreign Exchange: The US dollar index 95.62 off 0.1%. Focus is on safe-havens. In EM, USD mostly bid – EMEA: RUB off 0.5% to 67.204, ZAR off 0.4% to 13.882 – ASIA: INR off 0.8% to 70.93 while KRW off 0.45% to 1122.40. 

  • EUR: 1.1465 flat. Range 1.1451-82 with focus on 1.1420 and 1.1520 as hot points – ECB Draghi tomorrow – weaker data driving.
  • JPY: 108.00 off 0.5%.107.99-108.55 with EUR/JPY 123.90 off 0.5%  - all about equities with Japan on holiday. 
  • GBP: 1.2850 up 0.1%. Range 1.2818-1.2880 with EUR/GBP .8910 off 0.2% - Brexit and no deal fall-out vs. uglier politics in play 1.27-1.2950 keys. 
  • AUD: .7195 off 0.45%. Range .7175-.7218 with China trade and commodities driving - .7150 pivot against .7250 resistance. NZD off 0.2% to .6815. 
  • CAD: 1.3275 up 0.1%. Range 1.3254-1.3298 with focus on 1.3250 base building and 1.3320 resistance. Oil,rates and data driving. 
  • CHF: .9820 off 0.2%. Range .9812-.9846 with safe haven demand returning and risk for .97again. EUR/CHF off 0.3% to 1.1260. 
  • CNY: 6.7655 up 0.1%. Range 6.734-6.7720. The USD bid up on trade story with 6.73 base now for 6.80 retest.  
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