Markets Consolidate and S. Korea see unwinding of short USDKRW and long KOSPI positions

Risk means more things can happen than will happen.
~ Elroy Dimson

After the sharp gains yesterday, markets consolidated overnight. I am a better seller of USD on rallies in a data light week.

US2s +10 bps, 4.94%

US10s + 8 bps, 4.65%

US2s10s -30 bps (-3 bps)

DXY 105.26 +0.20%

FOMC Voter Lisa Cook said the Fed is determined to reach 2% inflation target; hopes that current policy settings are restrictive enough to return inflation to target. While Kashkari commented "we need to let the data keep coming to us to see if we really have got the inflation genie back in the bottle".

The SLOOS survey showed a net tightening of standards on loans for businesses and commercial real estate coupled with falling demand. Standards on loans to households, including credit card and auto loans, also tightened while demand weakened.

The week ahead is light on calendar with the US 3Y ,10Y and 30Y auction scheduled from tuesday through thursday. A few Fedspeaks lined up through the week with the most notable being Chair's Powell Speech tomorrow and on data , Jobless Claims and Michigan consumer inflation expectations.

On the domestic front,

Net liquidity injected INR 4700 cr

The WAR (weighted average rate) on C/T points was 0.15, 0.67% and traded as low as 0%. on T/S , WAR was 0.15, 0.67% and traded as low as 0.06. The forward curve was lower with the far end on the curve holding steady at 1.64%.

OIS1Y 6.87% (-2 bps)

OIS5Y 6.57% (-2 bps)

Other Global,

KRW continued the outperformance as spot touched lows of 1292.51 as the regulator announced a ban on short selling until June 2024. Today morning, we are seeing a reversal in the equity rally with KOSPI down 2% and USDKRW up 1.36% since bottoming out yesterday.

Today, Asian Equities are trading in the red with Shanghai being the outlier, + 0.20%

Australia Central Bank delivered a rate hike as inflation proved stickier after the extended pause since July of this year. The hike of 25 bps was on expected lines with cash rate now at 4.35%. RBA now expects CPI inflation to be around 3.5% by 2024 and at the top of the range of 2% to 3% by 2025. AUDUSD dropped from 0.6500 handle likely on expectations of rates peaking
Japan's largest industrial union, UA Zensen, announced it will be looking for a 6% increase to total wages for 2024 at the negotiations in the Spring.
Saudi and Russia confirming extended production cuts.
China Oct Exports fell 6.40% yoy following a 6.2% yoy decline in the previous month. Oct Imports rose 3.0% yoy following a 6.3% drop in the prior month. The uptick in imports suggests a revival of domestic demand after a slew of stimulus measures announced earlier. Trade surplus came in at $56.53 bn below consensus exp of $82.33 bn surplus.

That's the wrap from yesterday and today morning Asia Session. Happy Trading and making sense of the Financial Markets.

Comments

The Moment of Reckoning is here !! 25 or 50 Bps and the SEP || Benign PCE Expectations || USDJPY 145.75 or 137.50 ??

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The Pendulum Swings Again - From Soft Landing to Fears of a Recession | Employment | US2s and US10s Technical Levels | Macro Musings

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One of my favorite poem is by Kahlil Gibran and thought I'd share a couple of lines with you all... Do not live half a life and do not die a half death If you accept, then express it bluntly, Do not mask it If you refuse then be clear about it for an ambiguous refusal is but a weak acceptance Do not accept half a solution, Do not believe half truths, Do not dream half a dream, Do not fantasize about half hopes To reach and not arrive, Work and not work The half is a mere moment of inability, but you are able for you are not half a being You are a whole that exists to live a life not half a life” On that note, quick weekly roundup for the US markets below: The Fed Fund Futures are pricing in 88% probability of a rate cut by September Policy. The Atlanta FED GDPNow Estimates for Q3 growth readings are running at 2.8%. The Cleveland Fed estimates for Core CPI and Core PCE are running at 0.27% and 0.22% respectively mom. In the last blog piece...

Shroedinger's Cat ~ Preparation is the Key to play markets || US Politics || Macro Musings

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