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Morning bid: Markets go all in for disinflation
  + stars: | 2023-02-02 | by ( Wayne Cole | ) www.reuters.com   time to read: +3 min
SYDNEY, Feb 2 (Reuters) - A look at the day ahead in European and global markets from Wayne Cole. The very first question in the new conference invited him to scold markets, and he notes conditions had tightened a lot last year. A pdf search of the conference shows disinflation or disinflationary was used 13 times, compared to twice at his December event. Key developments that could influence markets on Thursday:- BoE rate decision is at 1200 GMT and the ECB at 1315 GMT. BoE Gov Bailey speaks to reporters at 1230 GMT and ECB President Lagarde at 1345 GMT.
Asia shares brace for rate hikes, earnings rush
  + stars: | 2023-01-30 | by ( Wayne Cole | ) www.reuters.com   time to read: +4 min
Asia has been no slouch either as China's swift reopening bolsters the economic outlook, with MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) up 11% in January at a nine-month high. "We also look for him to continue to push back against market pricing of rate cuts later this year." "Based on our recent Asia supply chain checks we believe iPhone 14 Pro demand is holding up firmer than expected," they added. Market pricing of early Fed easing has been a burden for the dollar, which has lost 1.5% so far this month against a basket of major currencies. read moreEarly Monday, Brent was up 79 cents at $87.45 a barrel, while U.S. crude rose 66 cents to $80.34.
Analysts had thought there was some chance the RBA might even pause its tightening campaign, but the sheer pace of inflation put paid to that. Price rises were broad-based with a closely watched measure of core inflation, the trimmed mean, rising 1.7% in the December quarter. Costs pressures were also building in the service sector which recorded its largest annual rise since 2008, driven by holiday travel, meals out and takeaway food. "Strong demand, particularly over the Christmas holiday period, contributed to price rises for domestic holiday travel and international air fares," said Michelle Marquardt, ABS head of prices statistics. With inflation pressures broadening yet further, markets moved to price in the risk of at least two more rate hikes from the RBA with swaps implying a peak above 3.60%.
Morning Bid: It's all about the weather
  + stars: | 2023-01-24 | by ( ) www.reuters.com   time to read: +2 min
A look at the day ahead in European and global markets from Wayne Cole. Essentially banks could borrow at an average 0.145% fixed for five years to invest in JGBs - what could go wrong? The U.S. manufacturing PMI is forecast to dip to 46.0 from 46.2, with services at 45.0 from 44.7. Ironically, the weather in the States in recent weeks has been a lot worse than in Europe, which was not how this story was supposed to pan out. ($1 = 130.2100 yen)Reporting by Wayne Cole; Editing by Jacqueline WongOur Standards: The Thomson Reuters Trust Principles.
NEW YORK, Jan 23 (Reuters) - The dollar edged lower against the euro on Monday, as the common currency found support from European Central Bank officials' comments signalling additional jumbo interest rate rises in Europe. The euro reached as high as $1.0927 , to trade at its highest level since April last year, before paring gains to trade up 0.1 % at $1.0865. A Reuters survey of analysts also favoured hikes of 50 basis points at the next two meetings and an eventual rate peak of 3.25%, from the current rate of 2%. "Really what's driving things is central bank policy divergence," said Joe Manimbo, senior market analyst at Convera in Washington. So when you weigh the outlook for central bank policy, it depicts the dollar at a disadvantage, given market bets on the Fed moving more slowly than its counterparts abroad," Manimbo said.
The euro reached as high as $1.0927 , breaking the recent peak of $1.08875, to trade at its highest level since April last year. The single currency was aided by European Central Bank (ECB) governing council members Klaas Knot and Peter Kazimir, who both advocated for two more 50 basis point hikes at meetings in February and March. A Reuters survey of analysts also favoured hikes of 50 basis points at the next two meetings and an eventual rate peak of 3.25%, from the current rate of 2%. Investors also have around 50 basis points of U.S. rate cuts priced in for the second half of the year, reflecting softer data on inflation, consumer spending and housing. The pound rose as high as $1.24475 , its highest in seven months, before turning 0.3% lower to $1.2355.
The euro reached as high as $1.0927 , breaking the recent peak of $1.08875, to trade at its highest level since April last year. It was aided by European Central Bank (ECB) governing council member Klaas Knot, who said interest rates would rise by 50 basis points in both February and March and continue climbing in the months after. A Reuters survey of analysts also favoured a hike of 50 basis points in March and an eventual top of 3.25% from the current rate of 2%. "Layered on top of that, it looks as if the ECB are going to carry on hiking interest rates fairly aggressively," Foley added. Investors also have around 50 basis points of U.S. rate cuts priced in for the second half of the year, reflecting softer data on inflation, consumer spending and housing.
Morning Bid: Euro rising
  + stars: | 2023-01-23 | by ( Wayne Cole | ) www.reuters.com   time to read: +2 min
SYDNEY, Jan 23 (Reuters) - A look at the day ahead in European and global markets from Wayne Cole. It's been a quiet start to the week in Asia with much of the region on holiday. U.S. stocks futures are near flat, but EUROSTOXX futures added 0.5% to extend their recent bullish run. Analysts assume the same sea change will deliver an improvement in the EU flash PMIs for January this week, likely outperforming the U.S. surveys. Key developments that could influence markets on Monday:- ECB's Lagarde and Panetta are appearing- No major economic data due on Monday.
Euro clears 9-month peak as ECB hawks let fly
  + stars: | 2023-01-23 | by ( Wayne Cole | ) www.reuters.com   time to read: +3 min
The euro reached as far as $1.0903 , breaking the recent peak of $1.08875 and opening the way to a spike top from last April at $1.0936. It was aided by European Central Bank (ECB) governing council member Klaas Knot, who said interest rates would rise by 50 basis points in both February and March and continue climbing in the months after. A Reuters survey of analysts also favoured a hike of 50 basis points in March and an eventual top of 3.25%. Investors also have around 50 basis points of U.S. rate cuts priced in for the second half of the year, reflecting softer data on inflation, consumer spending and housing. read moreAny hint the replacement is less dovish than current governor Haruhiko Kuroda could see the yen climb anew.
Euro nears nine-month peak as ECB hawks let fly
  + stars: | 2023-01-23 | by ( Wayne Cole | ) www.reuters.com   time to read: +3 min
The euro crept ahead to $1.0870 and nearer its recent nine-month peak of $1.08875. It was aided by European Central Bank (ECB) governing council member Klaas Knot, who said interest rates would rise by 50 basis points in both February and March and continue climbing in the months after. Much the same argument goes for sterling, with markets wagering the Bank of England will hike by half a point to 4.0% at its policy meeting next week. Analysts assume the BOJ will stand the line until at least the next policy meeting in March, though one hurdle will be the expected naming of a new BOJ governor in February. For now, the dollar was holding at 129.40 yen , following last week's wild gyrations between 127.22 and 131.58.
Figures from the Australian Bureau of Statistics (ABS) on Thursday showed net employment fell 14,600 in December from November, when it surged by a revised 58,200, and missed forecasts for an increase of 22,500. "The strong employment growth through 2022, along with high participation and low unemployment, continues to reflect a tight labour market," said Lauren Ford, head of labour statistics at the ABS. ABS data out this week showed net temporary arrivals jumped by 180,000 between July and November, the largest five-month increase on record. This includes those on skilled visas, temporary work visas and students. "It represents important progress in the alleviation of labour supply constraints which featured prominently in 2022," said Ryan Wells, an economist at Westpac.
Morning Bid: BOJ goes for broke
  + stars: | 2023-01-18 | by ( Wayne Cole | ) www.reuters.com   time to read: +3 min
SYDNEY, Jan 18 (Reuters) - A look at the day ahead in European and global markets from Wayne Cole. Global bond markets breathed a sigh of relief and U.S. 10-year yields eased 8 basis points to 3.48%. The BOJ will continue to buy bonds in whatever amount necessary to maintain its target for 10-year JGB yields at zero. It was unclear how meaningful this change would be, but the BOJ's defiant stance did see 10-year JGB yields backtrack to 0.36% from an early high of 0.51%. Analysts still suspect the BOJ will again have to buy a record amount of JGBs this month to maintain the ceiling.
Asian shares cautious, BOJ faces crunch policy decision
  + stars: | 2023-01-16 | by ( Wayne Cole | ) www.reuters.com   time to read: +5 min
Earnings season gathers steam this week with Goldman Sachs, Morgan Stanley and the first big tech name, Netflix, among those reporting. However, it did try to get ahead of speculative sellers by announcing it would do another emergency round today, suggesting it was determined to defend its yield policy at least for now. THE YEN UN-ANCHOREDThe BOJ's uber-easy policy has acted as a sort of anchor for yields globally, while dragging down on the yen. Were it to abandon the policy, it would put upward pressure on yields across developed markets and likely see the yen surge. "A soft-landing also reduces the tail risk of much higher U.S. rates, and this reduced risk premia helps global risk appetite."
TOKYO, Jan 13 (Reuters) - Yields on Japan's benchmark 10-year government bonds breached the central bank's new ceiling on Friday in the market's most direct challenge yet to decades of uber-easy monetary policy. The central bank already holds 80% to 90% of some bond lines. REMEMBER THE RBAThere is talk in the markets that the central bank could shorten its yield target to three- and five-year bonds, but history abroad suggests the strain will remain. With the local economy recovering faster than expected and inflation accelerating, the RBA realised its pledge to keep three-year yields at 0.1% out to 2024 was no longer credible. So it abruptly dropped the whole thing and three-year yields spiked to 0.48%, an episode the RBA itself conceded caused "reputational damage" that would not be repeated.
Morning Bid: RIP YCC?
  + stars: | 2023-01-12 | by ( Wayne Cole | ) www.reuters.com   time to read: +3 min
SYDNEY, Jan 12 (Reuters) - A look at the day ahead in European and global markets from Wayne Cole. This, presumably, refers to the fact that 10-year yields have been stuck at the new YCC ceiling of 0.5% for four sessions, even while the BOJ has been busy buying bonds in bulk to get them down. Then again, the market had thought the same last month when the central bank wrongfooted everyone by widening its YCC band. Whatever the decision, time is ticking for YCC and maybe even negative rates in Japan. As for U.S. CPI, the market is clearly priced for a dovish outcome, so there's some risk of disappointment.
Australian CPI inflation rebounds to annual 7.3% in Nov
  + stars: | 2023-01-11 | by ( ) www.reuters.com   time to read: 1 min
SYDNEY, Jan 11 (Reuters) - Australian inflation re-accelerated in November as strong demand drove holiday costs higher and flooding pushed up vegetable prices, a sign inflationary pressures had yet to peak. Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index (CPI) rose 7.3% in the year to November, entirely reversing a surprise pullback to 6.9% in October. A closely watched measure of core inflation, the trimmed mean, rose at an annual pace of 5.6% in November picking up from 5.4% in October. Reporting by Wayne Cole; Editing by Muralikumar AnantharamanOur Standards: The Thomson Reuters Trust Principles.
Data from the Australian Bureau of Statistics (ABS) on Wednesday showed retail sales jumped 1.4% in November from October to a record A$35.9 billion ($24.7 billion). "High jet fuel prices combined with strong consumer demand in November pushed airfare prices up, with accommodation prices also rising," said Michelle Marquardt, ABS Head of Prices Statistics. The combination of robust consumption and still rising inflation underline the challenge facing the Reserve Bank of Australia (RBA) as it tries to cool the economy. "That underlines that interest-rate sensitive spending categories are feeling the pinch from the RBA's aggressive tightening last year," said Thieliant. ($1 = 1.4512 Australian dollars)Reporting by Wayne Cole; Editing by Muralikumar Anantharaman and Edwina GibbsOur Standards: The Thomson Reuters Trust Principles.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 2.0% to a five-month top, with South Korean shares (.KS11) gaining 2.2%. Japan's Nikkei (.N225) was closed for a holiday but futures were trading at 26,215, compared with a cash close on Friday of 25,973. Earnings season kicks off this week with the major U.S. banks, with the Street fearing no year-on-year growth at all in overall earnings. "China reopening is one upside risk to 2023 EPS, but margin pressures, taxes, and recession present greater downside risks." Fed fund futures now imply around a 25% chance of a half-point hike in February, down from around 50% a month ago.
Asia shares rise on U.S. rate bets, China reopening
  + stars: | 2023-01-09 | by ( Wayne Cole | ) www.reuters.com   time to read: +4 min
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 1.5% to a five-month top, with South Korean shares (.KS11) gaining 2.1%. S&P 500 futures added 0.2% and Nasdaq futures 0.3%. EUROSTOXX 50 futures added 0.5%, while FTSE futures firmed 0.4%. "China reopening is one upside risk to 2023 EPS, but margin pressures, taxes, and recession present greater downside risks." The market scaled back bets on rate hikes for the Federal Reserve.
Asia shares skid on China woes, yen hits 6-month high
  + stars: | 2023-01-03 | by ( Wayne Cole | ) www.reuters.com   time to read: +4 min
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell another 1.3%, having lost a fifth of its value last year. The cautious mood spread to Wall Street, with S&P 500 futures off 0.4% and Nasdaq futures 0.6% lower. EUROSTOXX 50 futures fell 1.4% and FTSE futures 0.8%. The policy shift boosted the yen across the board, with the dollar losing 5% in December and the euro 2.3%. Brent lost 74 cents to $85.17 a barrel, while U.S. crude fell 62 cents to $79.64 per barrel.
Asia shares weigh China risks, yen hits 6-month high
  + stars: | 2023-01-03 | by ( Wayne Cole | ) www.reuters.com   time to read: +4 min
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) edged up 0.5%, having been down more than 1.0% in choppy early trading. Nikkei futures were trading at 25,750 compared with the last close for the cash index (.N225) of 26,094. Wall Street was in a guarded mood, with S&P 500 futures and Nasdaq futures up 0.1%. Such a move at its next policy meeting on Jan. 17-18 would only add to speculation of an end to ultra-loose policy, which has essentially acted as a floor for bond yields globally. The policy shift boosted the yen across the board, with the dollar losing 5% in December and the euro 2.3%.
Asia shares join Wall St bounce, yen keeps climbing
  + stars: | 2022-12-22 | by ( Wayne Cole | ) www.reuters.com   time to read: +3 min
read moreThat helped spark a rally on Wall Street with S&P 500 futures and Nasdaq futures both adding another 0.3% on Thursday. EUROSTOXX 50 futures rose 0.1% and FTSE futures 0.3%, though turnover was subdued by the usual seasonal lull. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) firmed 1.1%, while Chinese blue chips (.CSI300) rose 0.75%. "Insurance firms will be most affected by falling bond prices, whereas pension funds have most to lose from a stronger exchange rate. The dollar was already down at 131.93 yen , having shed 3.5% for the week so far, though it had found some support around 130.40.
Morning Bid: Questions after the storm
  + stars: | 2022-12-21 | by ( ) www.reuters.com   time to read: +3 min
A look at the day ahead in European and global markets from Wayne Cole. A day after the Bank of Japan's bombshell and things are looking a little steadier. Most Asian share markets and U.S. stock futures are up, and the Nikkei down only modestly. Analysts assume a formal shift will come after Japan's Spring wage talks and BOJ chief Kuroda's retirement in April. Analysts also suspect the BOJ shift meant the days of Japan desiring, or just accepting, a lower yen were over and the fallout in carry trades has been vicious.
The cost of paying your mortgage is literally going up for everyone by thousands of dollars," said the 31-year-old Lemon. Australia's big four banks - Commonwealth Bank of Australia (CBA.AX), Westpac (WBC.AX), National Australia Bank (NAB.AX) and ANZ (ANZ.AX) - account for 75% of the country's mortgage market. read moreThe RBA fears 15% of the borrowers on variable rates could see their cash flows turn negative, assuming that interest rates rise to 3.6% in line with market expectations. Buyers' agent Lloyd Edge says some cautious mortgage holders have been selling up before their fixed-rate loans expire. Hundreds of thousands of Australians took advantage of the ultra low rates during the COVID pandemic to enter one of the world's least affordable housing markets.
SYDNEY, Dec 20 (Reuters) - Australia's central bank considered leaving interest rates unchanged at its December policy meeting, citing the lagged effects of the aggressive tightening delivered so far and the benefits of moving cautiously in an uncertain environment. However, it was the first time the Board considered pausing since it started raising interest rates in May. Markets are split on whether the RBA will go ahead with another 25 basis point or even pause. They expect interest rates to peak at about 3.7% by August next year. "The Board expects to increase interest rates further over the period ahead, but it is not on a pre-set path," said the bank, reiterating its commitment to bring inflation to its 2-3% target.
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