The Most Valuable Thing

The Most Valuable Thing

 

08.28.2018,Wed， Sunny， Air Perfect

Summary：市场在对贸易谈判的期许中度过了又一天，美国多项经济数据报喜进一步改善市场氛围。Kashkari的话非常耐人寻味。

Euro Session:

 

AUD led losses among G10 after Trump said it’s not the right time for trade negotiations with US, denting hopes for a near-term deal coupled with A share under pressure after the rally in previous session. Both of them rebounded in the afternoon with CNY continuing on rally after being weak in the early session

 

The strength of CNY maintained the sentiment. EU equities opened mixed while FTSE MIB led the down side and FTSE outperformed most. BTPs were in strong bid tone with the 10yr italy government bond yield going up once more than 5bps. EUR and GBP kept resilient since the early report that Trump and Merkel were willing to talk about some trade issues.

 

Without Tier-1 data, EU market was bound to be quiet and constrained in thin liquidity waiting for US session especially when the market were ready to hug trade headlines hit the tape. BTPs pared its early gains while Italy equity (FTSE MIB) slumped even further. ke a short in spreads here. Tria said that Italy is not planning to breach the EU’s 3% deficit limit. He also said that Italy’s yield spreads will narrow when the government clarifies its budget plans.

Economy data:

2:45, FR Aug consumer confidence 97 vs 97, prior 97

4:00, IT Aug consumer confidence 115.2 vs 115.8, prior 116.3 revised down to 116.2

US Session:

Another quiet Tuesday night. When markets were waiting to see whether Monday's preliminary US-Mexico trade deal might be extended to include Canada (a development that would smooth its passage through the US Congress), the 10yr yield climbed 4bps with the front end only 1 bp higher which made the curve bear steepening.

 

US equities faded its open gains with no progress on trade talks with Canada or China.SPX spend most of the session hovering above 2800 and closed almost flat.

 

Economic data surprises to the upside in the US. Conference Board consumer confidence jumps to multi-year highs. I would like to stress the series of whole sale inventory has kept on increasing ever since this year. As a component of business investment which contributed even more than consumption in Q1 , its extended momentum does give us an excuse to be optimistic towards Q3, especially after taking the strong headline of non-farm productivity last week into consideration.

 

 

 

As to Fed, Kashkari( non-voter), U.S. needs to work out a trade deal with Canada because it’s such an important trading partner. Farm economy is under pressure, tariffs are a concern.

 

37bn 5yr notes auction went smooth, draw at 2.765% ,only 0.1bp higher than wi. Indirects took 66.2%, Directs 9%, Dealers 24.8%. But the bid-to-cover ratio dropped sharply yet at a elevated level.

 

Economy data:

Jul. Advance Goods Trade Balance was -$72.2bn vs, -$69.0bn from -$67.9bn expected.

Jun. S&P Core Logic 20-City Home Prices were +6.3% y/y vs. +6.4% expected.

Aug. Richmond Fed was 24 from 20 vs. 17 expected.

Aug. Conference Board Consumer Confidence was 133.4 from 127.4 vs. 126.6 expected.

Jul. preliminary Wholesale Inventories were +0.7% m/m vs. +0.2% expected.

Key Data And Events Ahead:

USA: GDP (Q2S), Pending home sales (Jul), MBA mortgage applications;

CAN: Current account (Q2);

UK: BRC shop price (Aug);

DEU: GfK consumer confidence (Sep);

FRA: GDP (Q2P), Consumer spending (Jul);

JPN: Consumer confidence (Aug)

Comments:

The famous dovish Kashkari said last night expansions don't last forever , Fed wants to extend it. This words sounds to me quite like those of " I should not win the tight election" when Trump on FOX last Tuesday, which makes me have a feeling of deeply worrisome. The higher you climb, the bitter you could be hit. US economy is strong even without weakening signs in short term. But the market is full of the questions such as when the cyclical peak arrive, how the fiscal incentive fade and the most popular topic on 2s10s. All in all, I have a strong feeling the hope, which is always the most valuable things in this world , of trade issues fading is really not small.

 

Last night, Mnuchin said the US welcomes the recent strengthening adjustments to the currency, which could a strong explanation for CNY rallying these days. Tonight we shall get the second revise of Q2, which is likely to reaffirm growth with a 4 handle. The firm US economy could well support the yield go higher which could drag up CNY rates.

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近期重要时间点：

9月3日，第二批A股纳入MSCI

9月5日，200bn听证会后申诉材料提交截止日

9月13日，ECB议息

9月18日，EU A50会议

9月20日，EU非正式峰会,日本LDP选举

9月26日，FOMC

9月，日本LDP选举,半岛峰会在平壤

9月27日，意大利提交财政预算案

10月16日，EU A50会议

10月25日,ECB议息

10月31日，BOJ议息

11月6日，美国中期选举开始

11月8日，FOMC

11月11日，美国阅兵 (取消了，说是因为预算问题)

12月13日，ECB议息，EU 峰会

12月20日，FOMC

12月22日，改革开放40周年

2019年3月21日，EU 峰会

2019年3月29日，脱欧谈判截止

Appendix：his t overnight

0828 1732 Google search results for “Trump News” shows only the viewing/reporting of Fake New Media. In other words, they have it RIGGED, for me & others, so that almost all stories & news is BAD. Fake CNN is prominent. Republican/Conservative & Fair Media is shut out. Illegal? 96% of...

....results on “Trump News” are from National Left-Wing Media, very dangerous. Google & others are suppressing voices of Conservatives and hiding information and news that is good. They are controlling what we can & cannot see. This is a very serious situation-will be addressed!

0828 1757 “President Trump has done more for minority groups in this country than any president in decades.” @LouDobbs

0828 1802 NASDAQ has just gone above 8000 for the first time in history!

0828 2222 I smile at Senators and others talking about how good free trade is for the U.S. What they don’t say is that we lose Jobs and over 800 Billion Dollars a year on really dumb Trade Deals....and these same countries Tariff us to death. These lawmakers are just fine with this!

0828 2303 Google search results for “Trump News” shows only the viewing/reporting of Fake News Media. In other words, they have it RIGGED, for me & others, so that almost all stories & news is BAD. Fake CNN is prominent. Republican/Conservative & Fair Media is shut out. Illegal? 96% of....

....results on “Trump News” are from National Left-Wing Media, very dangerous. Google & others are suppressing voices of Conservatives and hiding information and news that is good. They are controlling what we can & cannot see. This is a very serious situation-will be addressed!

0829 0132 “Consumer confidence pops in August to highest level since October 2000” https://t.co/1Gg5IOtbNa

0829 0832 Such a fantastic win for Ron DeSantis and the people of the

$(AAPL)$$(AMZN)$