AUGUST 15, 2013
MARKET ANALYSIS:
- Thin markets can cut both ways. They can be either melodramatic or they can be volatile. Well, yesterday we got the later
- A weak Gilt auction was blamed as the catalyst for yesterday notch lower in FI
- Price action yesterday was about as sensical as a 3yr old. If Risk Off was in control why did Fixed Income sell down. If Taper Talk was in control why did the Greenback get bashed and Gold and Silver rise? ANSWER, THIN MARKETS CAN BE IRRATIONAL
- Geopolitics are still a factor in the middle-east, where, as we have highlighted before it is the spillover effect that we are concerned about more than Syria or Egypt.
- Asia equities moved lower overnight though the Shanghai Index "strangely" rose.
- China pared their U.S Treasury holdings.
- As we said the prior day about Bullard claiming SeptTaper was not a done deal, well he was back Thursday saying the FED could reduce in small amounts.
- SUMMARY: A lot OF headline news from China on the wires this AM but nothing that we don't already know;... numbers aren't real, they are hurting much worse than is made out to be etc....Overall the market is preoccupied with Taper Talk. A relatively quiet day Data wise and Speaker wise. Two Notes Of Caution: 1) NO CB wants rates to rise dramatically right now. The BOE has the most mud on its face so expect CB Chatter to pick up soon about how rates will stay low at least until Greece returns back to the Drachma 2) As yesterday's price action was likely over exaggerated and although the Asia session is continuing that theme be prepared for unexplained turnarounds.
Real Time Economic Calendar provided by Investing.com
SUMMARY: Light data on the docket from Europe this AM. In the U.S the recently strong Housing & Building Permits could add more heat to the recent move down in Fixed Income.
Nothing on tap today
GLOBAL MACRO THEMES:
FED Tapering in Sept / Debt Ceiling / Student Loans and Muni's Defaults / Eurozone Dysfunctionality / China Slowdown / Japan's Money Printers / UK Improving on higher inflation and falling wages / EM Slowdown in Full Swing
Summary: Geopolitics are still front and center and Oil is continually moving higher. China is also capturing the spotlight this AM.There are no real Risk Aversion catalyst at work coming into the EU session so currently trading environment should persist.
Obama Getting close to calling out Egypt - Bloomberg
WTI Oil Trades Near Two-Week High Amid Unrest in Egypt - Bloomberg
Asia Down on Taper Talk while the Kiwi takes a hit after earthquake strokes - Bloomberg
Financial Risks Posed by China - WSJ
This article irks me b/c is this was not already obvious you should be playing this game "Fed's Bullard Floats Idea of Small Cuts to Bond Buying. - WSJ
More China choking - NYT
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