MARKET REPORT
Review:
– Downward PMI revision
– Raft of corporate debt issuance
– Senior Hamas official killed by Israeli drone strike, Beirut; “
– Usual Red Sea concerns
– Barclays downgrades Apple
– Weak PMIs in Europe and China.
– Dollar UP :
AUD 67.61 -0.8% (68.40 – 67.60) close on lows
EUR 91.37 +0.95% (90.50 – 91.37) close on highs
GPB 126.20 -0.85% (127.50 – 126.20) close on lows
JPY 142 +1.085% (140.80 – 142.17) close just off highs
– Gold down: $2067 -0.22%
– DOW down -0.05%, ES down 0.65%, ND down 1.75%
– Crypto: BTC Up 1500 +3.35%. ETH up 30 +1.20%
– Crude -$1.10/1.5% $70.55
Upcoming:
US: ISM Manufacturing PMI
Fed Minutes (Wed)
NFP, ISM Services (Fri)
Speakers: Feds Barkin
AU: Australian Services & Composite Final
MAJORS:
DX:
Likely firmer yields gave a floor to the dollar after touching several key handles across multiple majors of recent. There’s a raft of US corporate supply which sold bonds leading to higher yields leading to dollar support. Big week with both Minutes and Non-Farm (and lessor ISM’s x2). Note the minutes only cover info up to the latest meeting ie Dec 13th. So any data post will NOT be incorporated (GDP, PCE, Dovish market pricing, Fed chatter etc).
No call on direction. Index cam close to testing the 100 handle but fundamentals provided a floor. I like +101 to hold pre Wed minutes. Buy anything sub 101.50 for a look at 102 and change. Week of strong data will negate anything but short time-frame views.
101.34 – 102.91
AUD:
Initially outperforming the other majors vs Dollar strength the AUD touched 68.40 early before closing on lows. A one way street. I like 68 to hold, it may get washy around the number with (see above) false breaks, but I cant see sustained hold above 68 pre data. Fade strength for a look at 67 the handle even. Watch for a run down.
66.81 – 68.12
EUR:
90 held and the EUR has done heavy work around 91 with the 90 handle forming a base. Data dependent but anything 90.90+ is a buy. I doubt we’ll see even that with a look at 91 more less likely than likely. 90.50 strong support.
Weaker Euro data overnight supported the dollars gain vs with German employment this week worth a secondary watch. Get on board a move up. Trend is up short term.
90.90 – 92.25
Pound Pound:
127.50 to close on lows at 126.16 the Pound should hit mid low 125’s next 48. 125.50 on the cards, not much firther pre dat. 125 should hold.
125.38 – 127.12
Yen:
Yen and AUD both outperformed their Euro counters with the Yen rising only to 142 even. Im neither way on the Yen relative to the other majors. Expecting more Dollar firmness pre Minutes so could see the Yen move up to 143 the handle. Relative to the others I don’t have an opine.
No call. Likely firmer on Dollar continued base formation.
Gold and Silver:
Dollar firming capped GC and SI although both only off small, GC outperforming SI. It was a fun (for some) day in the commodities markets with points of note being coal dumped 10%, Natural gas -6% being more interesting than a muted precious metals market.
Of interest is with Dollars strength and higher yields GC should’ve been down 1.5%, it was only down 0.2%. Cant sell it……?
A RAFT of data this week wil provide further direction. Appears mkt LOOKING for an excuse to break higher though.
No call.
Equities:
– SPX -0.57% 4,742
– NDX -1.68% 16,543
– DJI +0.07% 37,715
DAX +0.11% 16,769.36
FTSE 100 -0.15% 7,721.52
CAC 40 -0.16% 7,530.86
Euro Stoxx 50 -0.21% 4,511.95
US Sectors:
Technology -2.58%, Industrials -0.95%, Communication Services -0.91%, Consumer Discretionary -0.92%, Materials -0.2%, Financials +0.39%, Real Estate +0.93%, Energy +1.19%, Consumer Staples +1.15%, Utilities +1.38%, Health +1.76%
– Apple: -3.5%: Downgraded at Barclays; cited weak iPhone 15 volumes, along with Macs, iPads, and wearables.
– Moderna: +13%: Upgraded at Oppenheimer; said MRNA’s multiple product launches in the next 12 to 18 months should help top-line sales start to grow in 2025
– Boeing: -3.5%: Downgraded to ‘Buy’ from ‘Conviction Buy’ at Goldman Sachs; removed the shares from its Conviction List as part of its monthly “Directors’ Cut” update.
– Tesla flat: Q4 deliveries were more or less in line.
– Rivian: -10%: Q4 deliveries fell short of expectations.
Oil:
Oil prices were ultimately lower on Tuesday after the initial strength on Red Sea troubles reversed in the US session. WTI and Brent futures climbed to peaks of USD 73.64/bbl and 79.06/bbl, respectively, at the London/NY handover before strong selling was seen after cash energy products opened from 09:00ET. The main driver being cited for the earlier strength had been developments in the Red Sea after the US destroyed three Houthi ships, Iran sent a warship to the area, and Maersk (MAERSKB DC) suspended sailings until further notice after one of its ships was attacked on Dec. 30th. However, there was no obvious catalyst behind the pullback lower as stateside trade got underway Tuesday; the downside in broader risk appetite (stocks) was likely a factor, while some desks pointed to the weak PMIs seen in both Asia and Europe (despite oil not falling at the time of their release). The selling extended through into the futures settlement. Note the weekly US energy inventory data (both the private and the EIA figures) has been delayed by a day on account of the market holiday on Monday.
Oil report courtesy of zerohedge.com
Bond Yields:
1 Mo: 5.389 -0.017 6Mo 5.259 -0.003 1yr 4.808 +0.038 5yr 3.922 +0.092 10yr 3.941 +0.081 and the 30yr 4.083 +0.065
2’s/10’s -0.38
Crytpo:
“Strat: Buy BTC and LEAN on ETH.”
Down about 3% on this trade since recommended. Put this in the wrong column.
BTC got into the golden 41.5+/sub 42 range over the break which is a screaming buy and Im shocked we saw it again. Then we launched overnight back to 45.5+ up over 5% before profit taking saw us back at 45k even +4%.
ETH under performed at +1.5% to 2370.
Still expect 50k and 2500k in Jan.
Best of luck out there. Let the market come to you.
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