E Markets: Bruised

  • The Swiss National Bank keeps policy unchanged with -0.75% 3M Libor target - as expected – with continued FX intervention as needed. The SNB now sees lower GDP for 2018 at 2.5% and 1.5% in 2019. They see the risks to the downside due to the global economy. Inflation is also expected lower with 4Q 2019 down to 0.6% from 0.8% in September. 

Market Recap:

Equities: The S&P500 futures are up 0.25% after a 0.54% gain yesterday.  The Stoxx Europe 600 flat at 350 after early gains reversed but bounce back on ECB.

  • Japan Nikkei up 0.99% to 21,816.19
  • Korea Kospi up 0.2% to 2,095.55
  • Hong Kong Hang Seng up 1.29% to 26,524.35
  • China Shanghai Composite up 1.23% to 2,634.05
  • Australia ASX up 0.14% to 5,735.30
  • India NSE50 up 0.50% to 10,791.55
  • UK FTSE so far off 0.4% to 6,854
  • German DAX so far off 0.1% to 10,916
  • French CAC40 so far off 0.3% to 4,894
  • Italian FTSE so far up 0.8% to 19,103

Fixed Income: Waiting game with ECB news conference and US data – mood is holding pattern with most biased to sell if risk-on returns. German 10-year Bund yields 0.28% up 1bps, France off 1bps to 0.71%, UK Gilts off 1bps to 1.27% while periphery extends on ECB with Italy off 12bps to 2.9%, Spain off 3bps to 1.41%, Portugal off 5bps to 1.69% and Greece off 4bps to 4.22%. 

  • US Bonds waiting game with curve focus– 2Y flat at 2.77%, 5Y off 1bps to 2.76%, 10Y flat at 2.91%, 30Y flat at 3.15%
  • Japan JGBs curve steeper– 2Y off 1bps to -0.14%, 5Y up 1bps to -0.11%, 10Y up 1bps to 0.06%, 30Y up 1bps to 0.80%. 
  • Australian bonds sold off with risk-stabilizing– 3Y up 4bps to 1.99%, 10Y up 3bps to 2.48%. 
  • China bonds see curve steeper on equity stability, trade deal hopes– 2Y off 2bps to 2.76%, 5Y up 4bps to 3.04%, 10Y up 4bps to 3.34%. 

Foreign Exchange: The US dollar index flat at 96.95. 

  • EUR: 1.1370 flat. Watching 1.13-1.1420 still – market stuck with ECB.  
  • JPY: 113.50 up 0.15%.Watching 114 for a breakout but see crosses and rates as hampering. 
  • GBP: 1.2660 up 0.3%.Bouncing on May surviving but hardly enough with 1.25-1.2750 now keys.
  • AUD: .7230 up 0.15% and NZD up 0.1% - nothing special here despite China hopes – market watching commodities. 
  • CAD: 1.3365 up 0.1%- Oil and data driving with 1.33-1.3450 keys.
  • CHF: .9925 up 0.1%- stuck with SNB not doing enough and watching stocks/Brexit/Italy and ECB dovish tone risks.
  • CNY: 6.8745 up 0.1%- with deal hopes higher – 6.83-6.92 keys. 
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