Apr 10, 2017 - Market Update

Short recap

Asia with some caution

Europe opened higher but mixed now

Trump-Xi meeting – both declared friendship, trust and ready to work together…but no agreements

No real consensus on North Korea, US trade deficit on the table over the next three months

Chinese in South Korea to discuss North Korea

US NFPs lower on weather and layoffs in retail sector

Underlying theme staying strong with good household survey and unemployment rate down to 4.5% (full employment) without any change in participation rate

Canada still not sure about how US is committed to introducing a border tax

Oil looking for a balance between Syria, higher demand and drilling activity in US

Deutsche Bank raised EUR 8 bln of fresh capital what can please regulators

And help with new investments and legal expenses

Rio Tinto had a lower tax bill globally due to lower earnings

Fox (part of Murdoch’s group) to acquire Sky

US equity funds experienced a huge outflow

As US investors search for better opportunities overseas going to Q1 earnings season

10-yr Bunds yield at 0.23%

10-yr Trys yield at 2.39% - after US NFPs the yield dipped below 2.30% support but recovered quickly

Trys kept selling off as market focussed on positive part and Dudley downplayed the impact of reduction in balance sheet on the pace of rate hikes

And confirmed the reduction start at the end of 2017 or early 2018

Moves in USD and Trys yields after NFPs clearly point to stronger USD and higher US yields

ECB to publish bond buying data (first after lowering the monthly buying amount)

Used to buy EUR 365 mln a day

Staying close to EUR 300 mln a day may have a positive effect on corporates but negative on govs

Recall – ECB has not specified about the split: govs/corps, sector…etc.

COT report

EUR staying pretty flat after adding few shorts

GBP near record shorts after trimming them a bit

USDJPY – traders not sure about risk off mood as the JPY weakens (after NFPs/Dudley)

If we get well above 112.00, we are likely on the way higher towards 115.00

Gold 3m vols very low close to 2013/2014 levels

If geopolitical/risk off even or 200 DMA at 1255 broken

We can see a sharp move higher

Data

EZ: Sentix Investor Confidence Index expecting higher print

US: Labor Market Conditions Index expecting a lower number

US: Employment Trends Index to provide a bit more clarity on Friday’s NFPs

G7 foreign ministers meeting in Italy today

Yellen speaking (2000 GMT)

Short week ahead of Easter holidays, thus lower liquidity

Apr 23 – French presidential elections

Apr 29 – EU Summit to sign off the Brexit negotiations guidelines – until then we won’t have clearer EU position on Brexit

May 7 – French presidential elections 2^nd round

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

Good luck Champs!

Mr Hawk

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