May 30, 2017 - Market Update

Short recap

Asian stocks with cautious on Greece and Italy

China, Hong Kong closed on account of public holiday

Europe opening lower

Greece readying for not paying EUR 7 bln installment if bail out agreement/haircut not reached

Some banks in Italy and Portugal still facing issues

Macron met with Putin in Paris

Draghi is please by improving economy but stimulus/extra low rates to stay

Weidmann said that ultra-loose policy still appropriate

Equities

Akzo Nobel’s rejection of the offer from PPG Industries (EUR 25 bln) blessed by court

Clouds mounting over Canadian banks (Home Capital & real estate) as well as Australian banks (Chinese capital controls not boding well for Aussie real estate)

US equities printing new highs and volatility down putting global equities to positive light

Bonds

10-yr Trys yield at 2.24%%

10-yr Bund yield at 0.30%

EURUSD

Under pressure from Greece, potential snap elections in Italy, mess around UK and dovish Draghi

IT to introduce a new election threshold for parties (5%+)

What in turn will reduce number of parties elected to 4 from current 10+

Greek debt not to be included to QE program from ECB anytime soon

Nor Greece financing themselves in the markets

1.1140/55 range acting as resistance

If we close below the 1.1000 in sight

If we break than the 1.0840 will likely be the next

1.1000 – growing importance 

1.1128 (61.8% Fibo Nov/Jan)

1.0978 (50.0% Fibo Nov/Jan)

Large option EUR 2.7 bln with strike 1.1100 expiring today

USDJPY

Offers around 111.50

Stops likely below 110.85 level, bids can show up on a break

Large options (USD 2 bln) with strikes below 111.00 expiring today

200 DMA at 110.15 – a pretty strong support…

Data

GE: Flash CPI m/m expected at -0.1% and y/y expected at 1.6% vs 2.0% prior

US: PCE m/m expected at +0.1% vs -0.1% previous; y/y was 1.6% previously

ECB’s Liikanen (1015 GMT)

ECB’s Nowotny (1600 GMT)

Fed’s Brainard (1700 GMT)

Wed

EZ: Flash CPI – should move back to 0.8% level from 1.2% prior

Former FBI director James Comey to testify before Senate

Beige Book

ECB’s Coeure, Lautenschlaeger

Fed’s Kaplan, Williams

Thu

ECB’s Villeroy

Fed’s Powell

Fri

US NFPs 185k exp vs 211k prior

Unempl. rate 4.4% exp vs 4.4% prior

Average earnings +0.2% exp vs +0.3% prior

Fed’s Harker

EU-China Business summit (Juncker/Li)

June 8 – ECB meeting

June 8 – UK elections including Scotland, if SNP/Sturgeon wins the independence referendum likely to follow

June 11/18 – French Legislative (Parliamentary) elections (a big question mark for Macron to gain majority)

June 13/14 – FOMC meeting

June 15/16 – EcoFin meeting to discuss Greece

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

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