Market in Review 2/7/2024

MARKET REPORT

Review:
– NYCB cut to junk at Moody’s
– Israel rejects Hamas demands for a ceasefire
– Fed Kugler “ some point, the cooling of inflation and labour markets may make it appropriate to cut rates, but if disinflation progress stalls, it may be appropriate to hold policy rate steady for longer”
– Fed Barkin “makes sense to be patient on rate cuts, noting the uncertainty in the economy.”
– Fed’s Collins “said the Fed is likely to cut rates later this year if the economy meets expectations”
– Dollar/Gold flat, Stocks/Crypto/Crude up

DOLLAR:
– AUD UNCH: 65.20                        UNCH (65.35 – 65.13) close off lows
– EUR down smalls: 92.85             -0.14% (92.72 – 92.95) close mid rge
– GPB up smalls: 126.25                 +0.24% (126 – 126.40) close off highs
– JPY up smalls: 148.08                  +0.13% (148.20 – 147.70) close off highs

GOLD UNCH:                                   $2050 +UNCH ($2047 – $2061) close off lows
DOW/ES/ND up:                              38785 +0.45%, 5015 +0.8%, 17857 +1.1% close highs
CRYPTO: BTC/ETH up:                    +1000/+2.5% 44190, +48/+2% 2425 close highs
CRUDE up:                                        $74.06 +$0.75/+1% close highs

Upcoming:

CH CPI
NZ Inflation Forecasts
JAP M2 Money Supply
US Wholesale Inventories
ECB Economic Bulletin
RBA Policy Announcement

Speakers:

BoE Dhingra & Mann
ECB Elderson & Lane
Fed Barkin
RBA Bullock

Earnings:   SocGen, L’Oreal, AstraZeneca, Maersk, Siemens

MAJORS:

DX:  
The Dollar was relatively flat on Wednesday amid a choppy yield environment in response to yo-yo price action in NYCB shares amid a junk downgrade at Moody’s, downgrades at JPM and BofA, a liquidity update, a new executive and following commentary. Nonetheless, DXY traded within a tight range between 103.93-104.16 with a lack of US data while Fed’s Kugler, Collins and Barkin all stuck to the Fed script.

No call

10-

AUD:
NZD gains were supported by a hotter-than-expected labour market report  which affected the AUD, which saw marginal weakness with cross-currency flows from AUD/NZD weighing. But a slow day across the board with tight ranges in all Majors.
65.18 – 65.35 rgr.
Nothing of note or worth remarking

Choppy trading around the figure to continue.

6-

EUR:
In the EZ, German Industrial output data for December was weaker than forecast, while ECB’s Schnabel spoke on the inflation risks of lower borrowing costs while commercial lenders are already reducing borrowing rates on mortgages in expectation the ECB will start to cut soon. She also warned the final mile in the ECB’s inflation fight could be the hardest part. On the neutral rate, the ECB said that while estimates of the euro area r* vary widely across a suite of models, the median estimate has risen by about 30 basis points compared with levels prevailing in mid-2019, before the onset of the pandemic.

No call

9-

POUND:
Out of the UK, BoE’s Breeden echoed the BoE’s latest statement, as she said she has become less concerned that rates might need to be tightened further, stating the focus has shifted to how long rates need to remain at the current level.

No call

1-

YEN:
The Yen saw mild weakness and USD/JPY looks set to head into the APAC session north of 148.00 despite earlier lows of 147.65 seen in wake of NYCB woes while UST yields hit their lows.

No call

1-

GOLD & SILVER:
Early Gold strength given up throughout the course of the trading day with Silver outperforming to the downside.

No call

EQUITIES:
US INDEXES:
– SPX +0.82%  4,995
– NDX +1.04% 17,775
– DJIA +0.40% 38,677
– RUT -0.17%  1,950

EUR INDEXES:
– DAX: -0.65%    16,921.96
– FTSE: -0.68%  7,628.75
– CAC: -0.36%   7,611.26
– ES: -0.29%      4,677.45

SECTORS (S to W): Technology +1.43%, Consumer Discretionary +1.12%, Communication Services +0.94%, Materials +0.81%, Financials +0.69%, Industrials +0.64%, Health +0.26%, Energy +0.17%, Utilities +0.05%, Real Estate -0.06%, Consumer Staples -0.08%

STOCKS:
Ford  +6%: Q4 top- and bottom-line beat, alongside firm guidance
CVS +3%: Beat on Q4 metrics and raised FY24 revenue and operating income guidance, but did see initial weakness post-results as it cut FY24 EPS view on rising medical costs
Alibaba -6%: Very choppy post-results, EPS was in line while revenue beat some forecasts but was light on others. The board approved a USD 25bln share buyback
New York Community Bancorp +6.5%: Moody’s downgraded to junk & NYCB subsequently issued liquidity and deposit information. Named Dinello Executive Chairman. New York Community Bancorp (NYCB) is reportedly in talks to offload mortgage risk and plans to sell RV loans, via Bloomberg citing sources; considering a synthetic risk transfer. RV sale is for circa. USD 1bln
Fox, Disney, Warner Bros. Discovery are creating a joint streaming platform to share sports assets.
Roblox +10%: Posted a smaller loss per share than expected and beat on bookings.
Uber +0.5%: Earnings beat with solid guidance, but some analysts said it was not as strong as expected.


OIL:
WTI (H4) SETTLED USD 0.55 HIGHER AT 73.86/BBL; BRENT (J4) SETTLED 0.62 HIGHER AT 79.21/BBL

WTI and Brent were slightly firmer, benefitting from the weaker Dollar and ever-present geopolitical tensions, but saw choppy trade in tight parameters with a lack of fresh fundamentals. On geopols, after a slew of back-on-forth (Israel/Hamas) on a potential ceasefire and frameworks, Israeli MoD told Blinken that Hamas’ negative response to the hostage deal proposal will push Israel to expand its ground operation in Gaza soon, downplaying any odds of a cease fire soon. Outside of Middle East tensions, the weekly EIA data saw crude stocks show a larger build than expected, at odds with the private inventory metrics on Tuesday, while Distillates drew more than expected and Gasoline stocks saw a surprise draw. Crude production rose 300k to 13.3mln, with Refining Utilisation fell 0.5% (exp. +1.0%, prev. -2.6%).

COMMENTARY: An OPEC executive said they expect global oil demand to grow by 2.2mln BPD this year and to ease to 1.8mln BPD next year. Meanwhile, an IEA exec said they are seeing delays of oil product deliveries impacting European markets in particular due to Red Sea attacks, although global oil markets are comfortable with supply due to growth from Non-OPEC producers and while demand is not as robust due to macroeconomic concerns. Oil report courtesy of newsquark

BOND YIELDS:
US 1-MO 5.378 -0.001 US 6-MO 5.258 +0.005 US 1-YR 4.842 +0.013 US 5-YR 4.065 +0.021 US 10-YR 4.115 +0.023 US 30-YR 4.318 +0.022
2YR/10YR -0.31

CRYPTO:
Further strength in Crypto saw closes on highs at 44300 & 2430 both coins up over 3%, BTC outperforming.

No call.

Best of luck out there. Let the market come to you

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