A convincingly bullish start to the week
A convincingly bullish start to the week
It's an impressive optimistic start to the week with rates, commodities, and futures all up. The positive trade news flow continued to resonate this morning, and China added to the enthusiastic vibe with un unexpected lending rate cut and better FDI print.
The PBoC unexpectedly cut the 7 Day reverse repo rate from 2.55% to 2.50% in today's OMO, the first easing in the liquidity tool in more than four years. The cut from the PBoC was a bit of a surprise, and suggest policymaker may be more reactive to weaker economic data for the remainder of the year which could lend a significant helping hand to retail investor sentiment by
Oil markets
Reports of a constructive discussion between US and Chinese officials over the weekend on trade and a fourth consecutive weekly decline in the US oil rig count reported on Friday are supporting oil this morning, with Brent above $63/b for only the second time since mid-September.
Unrest in Iraq continues, but so far has not resulted in any impact on Iraqi production or exports. The situation in Iraq is dire s, with hundreds reportedly killed in street protests, and it would not be a surprise to see an eventual impact on oil if tensions do not ease, and civil unrest possibly sets sights on the oil fields.
The OPEC meeting planned for the first week of December is setting up to be a significant catalyst for oil sentiment, with expectations that the group will extend and deepen the existing production cut agreement. But its a likely Phase one deal that is painting a more positive global demand outlook, which should keep oil holding a bid until the critical OPEC confirmation.
Is no news good news?
There was some excitement in markets just after the London open as risk caught a bid. Everyone was looking for a headline on the US-China trade to explain the moves, but there was nothing. For now, the market is running with it, so maybe a case of no news is good news, but indeed it does confirm the direction of travel the market wants to take.
Even Hong Kong is up
Even the Hong Kong markets ended the day in positive territory as or now geopolitical risks remain of little concern for markets at trade talk euphoria masks all other logical matters.
The Pound is adding to the risk on euphoria.
Adding to the risk-on beat, GBP continues to power ahead after the latest opinion polls showed the Tory lead remaining to widen, and the odds on them securing a majority have also narrowed. They are now rated as a 66% chance to secure a majority, according to Betfair.
Gold, the writing is on the wall??
The writing is on the wall as ETF turned to net selling last week with outflows of $2 bn after a powerful five months of buying. Last Friday's -$650 mn was the most significant selling day since November 2016.
Gold has undeniably lost luster in the past month, most obviously from the anticipation of a reconciliation between the US and China in trade negotiations, which has seen gold ETF's turning net sellers last week with outflows of $2 billion after a frantic five months of buying.
Optimism on the trade front is driving equity markets higher, which is depriving air for the gold market to breath. Starved of oxygen the market continues to fall as selling pressure continue to build with the next wave of aggressive selling and another possible ETF position purge intersecting at 1434.7 in December futures which is reportedly the next level for more CTA shorts to trigger
It's an impressive optimistic start to the week with rates, commodities, and futures all up. The positive trade news flow continued to resonate this morning, and China added to the enthusiastic vibe with un unexpected lending rate cut and better FDI print.
The PBoC unexpectedly cut the 7 Day reverse repo rate from 2.55% to 2.50% in today's OMO, the first easing in the liquidity tool in more than four years. The cut from the PBoC was a bit of a surprise, and suggest policymaker may be more reactive to weaker economic data for the remainder of the year which could lend a significant helping hand to retail investor sentiment by
Oil markets
Reports of a constructive discussion between US and Chinese officials over the weekend on trade and a fourth consecutive weekly decline in the US oil rig count reported on Friday are supporting oil this morning, with Brent above $63/b for only the second time since mid-September.
Unrest in Iraq continues, but so far has not resulted in any impact on Iraqi production or exports. The situation in Iraq is dire s, with hundreds reportedly killed in street protests, and it would not be a surprise to see an eventual impact on oil if tensions do not ease, and civil unrest possibly sets sights on the oil fields.
The OPEC meeting planned for the first week of December is setting up to be a significant catalyst for oil sentiment, with expectations that the group will extend and deepen the existing production cut agreement. But its a likely Phase one deal that is painting a more positive global demand outlook, which should keep oil holding a bid until the critical OPEC confirmation.
Is no news good news?
There was some excitement in markets just after the London open as risk caught a bid. Everyone was looking for a headline on the US-China trade to explain the moves, but there was nothing. For now, the market is running with it, so maybe a case of no news is good news, but indeed it does confirm the direction of travel the market wants to take.
Even Hong Kong is up
Even the Hong Kong markets ended the day in positive territory as or now geopolitical risks remain of little concern for markets at trade talk euphoria masks all other logical matters.
The Pound is adding to the risk on euphoria.
Adding to the risk-on beat, GBP continues to power ahead after the latest opinion polls showed the Tory lead remaining to widen, and the odds on them securing a majority have also narrowed. They are now rated as a 66% chance to secure a majority, according to Betfair.
Gold, the writing is on the wall??
The writing is on the wall as ETF turned to net selling last week with outflows of $2 bn after a powerful five months of buying. Last Friday's -$650 mn was the most significant selling day since November 2016.
Gold has undeniably lost luster in the past month, most obviously from the anticipation of a reconciliation between the US and China in trade negotiations, which has seen gold ETF's turning net sellers last week with outflows of $2 billion after a frantic five months of buying.
Optimism on the trade front is driving equity markets higher, which is depriving air for the gold market to breath. Starved of oxygen the market continues to fall as selling pressure continue to build with the next wave of aggressive selling and another possible ETF position purge intersecting at 1434.7 in December futures which is reportedly the next level for more CTA shorts to trigger