E Markets: Dealing

  • UK 3Q final labor productivity -0.4% q/q, up 0.2% y/y after +0.5% q/q, 1.6% y/y - as expected. This was the weakest productivity growth since 3Q 2016. Productivity in manufacturing rose 1.7% y/y while services rose 0.1% y/y. Unit labor costs rose 2.8% after 2.1% y/y. 

Market Recap:

Equities: The US S&P500 futures are up 0.2% after a 0.97% gain yesterday. The Stoxx Europe 600 is up 0.85% while the MSCI Asia Pacific rose 1.2%. 

  • Japan Nikkei up 1.10% to 20,427.06
  • Korea Kospi up 1.95% to 2,064.71
  • Hong Kong Hang Seng up 2.27% to 26,462.32
  • China Shanghai Composite up 0.71% to 2,544.34
  • Australia ASX up 0.95% to 5,838.40
  • India NSE50 up 0.49% to 10,855.15
  • UK FTSE so far up 1% to 6,930
  • German DAX so far up 0.9% to 10,904
  • French CAC40 so far up 1.1% to 4,827
  • Italian FTSE so far up 1.2% to 19,235.18

Fixed Income: Supply, Fed speeches, weaker data and another up day for equities – all driving safe-haven bonds lower – Germany flat with 10-year Bund yields at 0.23%, French OATs flat at 0.73%, UK Gilts up 2bps to 1.29% while periphery better with Italy off 4bps to 2.93%, Portugal off 2bps to 1.81%, Spain flat at 1.52% and Greece off 2bps to 4.33%. 

  • Germany sold E4bn of 10Y 0.25% Bunds at 0.29% with 1.62 cover(after Bundesbank holding). The previous auction in Nov 28 had 0.34% yields and 1.64 cover. 
  • US Bonds sold on equities with supply focus– 2Y up 1bps to 2.60%, 5Y up 2bps to 2.59%, 10Y up 2bps to 2.74%, 30Y up 2bps to 3.02%. 
  • Japan JGBs sold with curve steeper after BOJ– 2Y flat at -0.14%, 5Y up 1bps to -0.14%, 10Y up 3bps to 0.04%, 30Y up 2bps to 0.71%. BOJ bought Y4.3trn of 5-10Y and Y252bn of TIPS – unchanged amounts but with more cover – suggesting banks happy to take profits. 
  • Australian bonds sold with risk-rally ignore weaker data– 3Y up 3bps to 1.84%, 10Y up 3bps to 2.34%. 
  • China bonds extend rally– 2Y off 5bps to 2.63%, 5Y off 4bps to 2.89%, 10Y off 2bps to 3.13%. 

Foreign Exchange: The US dollar index is off 0.1% to 95.85. The USD is mixed in EM with Asia – KRW up 0.25% to 1119.10 and INR off 0.5% to 70.466 with oil. EMEA is USD bid – RUB off 0.2% to 67.02. ZAR off 0.1% to 13.976 and TRY off 0.5% to 5.515. 

  • EUR: 1.1450 up 0.1%.Range 1.1436-1.1479 with 1.13-1.15 prison holding but focus is on FOMC/rates again.  
  • JPY: 108.85 up 0.15%. Range 108.68-109.00 with EUR/JPY 124.65 up 0.1%. Focus is on equities/risk mood and US rates. 
  • GBP: 1.2735 up 0.15%.Range 1.2708-1.2777 with EUR/GBP.8990 off 0.05% - Brexit chatter changing with Jan 15 vote seen as less scary. 
  • AUD: .7165 up 0.35%.Range .7134-.7171 with copper up, China deal hopes with US rising. NZD .6775 up 0.75%
  • CAD: 1.3235 off 0.3%. Range 1.3223-1.3279 with BOC expected to sound a bit more hawkish than FOMC.  Oil and rates driving. 1.32 break opens 1.3050 risk. 
  • CHF: .9805 off 0.1%.Range .9791-.9818 with EURCHF 1.1235 flat. Tracking EUR and watching risk mood with .9680 target for $. 
  • CNY: 6.8325 off 0.3%.Range 6.8260-6.8520 with deal hopes driving – rate spread to US not a factor yet. 
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