Friday, 18 December 2015

A few macro and related stories today

A few macro and related stories today...

Bank of England – FT running a story that the governor of the BoE Mark Carney may consider a full 8 year term as he has ‘so much more he wants to do’.  On his appointment in 2012 he said that he would only do 5 years in the job.  Funny how it can be difficult to give up power...

European Council meeting – various warm words on the broader UK issues e.g. David Cameron: ‘Really good progress has been made but we're attempting something difficult’ and Angela Merkel: ‘treaty change might be possible later’.  On the broader migrant issue Donald Tusk noted ‘All building blocks now in place. European Border & Coast Guard proposal to be adopted in 6 months’.  All kicked into next year...when there will be lots more chat, debate and rhetoric about it all. 

Meanwhile...goodness Europe is complicated:

(h/t @paul1kirby)

Japan - kind of a bit more QE by the BoJ as they extend maturity of JGB holdings they are purchasing to 7-12 years and establish New Program For ETF Purchases Adding JPY 300 Bln To Current Purchases eve if the formal QE at Y80trn per month unchanged. 

And the reaction of the Nikkei? As I noted on Twitter:

'Nikkei turned out of +ve territory to be 1.7% lower after the BoJ’s surprise announcement' (via ). They needed a bigger QQE boat...

(h/t @DavidInglesTV)

Meanwhile Chinese new home prices in 70 large cities up 0.9% yoy in Nov (0.1% in Oct).  However the Q4 China Beige Book shows ‘Disturbing Deterioration In Economy with National sales revenue, volumes, output, prices, profits, hiring, borrowing, and capital expenditure were all weaker than the prior three months’.  Hmm.  Who smells an interest rate cut? (more of that below). 

Post Fed changes / currencies - Hike after FOMC: HK, Saudi, Kuwait, UAE, Bahrain, Mexico, Chile. Cut rate after FOMC: Vietnam, Taiwan.  Meanwhile a close Friday below 1998.75 would make this the first 3 week fall seen in S&P futures since 13 March 2015, 39 weeks ago (via Predicted Markets).  Are China going to change rates before the year is up?  Meanwhile the renminbi has been trading at fresh four-year lows all week and this morning the People’s Bank of China set the fix weaker again for the tenth day in a row adding to the pressure.

The PBoC set the fix, or mid-rate around which the renminbi is allowed to trade each day, 0.09 per cent weaker at 6.4814 per dollar. The daily fix is now 5.97 per cent softer than where the renminbi was valued before the surprise mid-August “devaluation.”


(both the above charts via Fast FT)

Going to be interesting as well to watch the £ as GBP/USD finished Thursday at the lowest closing level since Wednesday 15 April 2015, 176 sessions earlier (statistic via Predicted Markets). 

Agriculture - This strikes me as outrageous – corn futures estimated to remain flattish for the next decade.  Hmm.  

Monopoly money – look the same colours!

(h/t @McKibbinUSA)

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