"An investor needs to do very few things right as long as he avoids big mistakes"
I was facing some technical issue and hence the crazy delay in publishing the post.
On the Domestic side, Bloomberg Index Services proposed to include India FAR bonds in its EM local currency index over a 5 month period starting Sep 24 and invited feedback on the same. The inclusion could result in $2 - $3 bn of inflows acc to media reports. System Liquidity continued to be in deficit at inr 155k crs and WACR was at 6.77%. Forwards continued to be paid with Dec Swap points closing 2 bps higher on the day. Mifor curve was 2 - 3 bps lower with volumes of inr 4830 crs across 40 trades. OIS was 4 - 5 bps lower in the 2Y-5Y segment.
Bitcoin and Crude Oil prices were large movers yesterday.
Bitcoin surged ~ 7% in anticipation of SEC Bitcoin ETF Approval decisively
breaking above the 44750 level. Crude Oil prices however slumped over 3%. Saudi
Arabia cut the official selling prices (OSPs) for its crude loading in February
to all regions. The cut for Asian importers was the deepest, at $2 per barrel
for all grades that Saudi Arabia exports. The price cut is the deepest in 13
months but was in line with expectations, which also feature a softer Asian
market for crude. Concerns about oil demand overshadowed the continued risk to
cargoes in the Red Sea and a force majeure in Libya on the country’s largest
oil field, Sharara, which can produce up to 300,000 barrels of crude daily. OPEC
Production data also showed an increase of 70,000 bpd with OPEC collectively
pumping 27.88 mbpd. (ref: oilprice.com)
The US2s10s bull flattened and the initial sell off in bonds
reversed with yields closing lower than prior day. The implied Fed Fund pricing
for 2024 was relatively unchanged.
|
|
High |
Low |
Close |
DoD Change |
|
US 2Y |
4.41 |
4.30 |
4.38 |
-0.60 |
|
US10Y |
4.08 |
3.97 |
4.03 |
-1.80 |
|
US2s10s |
-0.31 |
-0.35 |
-0.35 |
-1.20 |
|
US30Y |
4.26 |
4.14 |
4.20 |
-0.90 |
|
JGB 10Y |
0.60 |
0.60 |
0.60 |
-0.20 |
The flow of consumer credit figures registered a sharp rise of $ 23.75 bn in November against consensus expectations of $ 9.00 bn.
Governor Michelle Bowman remarks on the Economy and Monetary
Policy resonated with the FOMC narrative. Policy continues to be restrictive
and has largely contributed to bring down inflation. Based on the continued
progress s far, Inflation could ease further at which point it will become
appropriate to lower the policy rate. The risks to view emanate from
Geopolitical concerns, reacceleration of growth from the sharp easing in
financial conditions and persistently higher Core Services inflation. So Fed continues
to be in a data dependent mode.
Fed President Raphael Bostic reiterated his stated view of
rate cuts later this year with two 25 bps cuts likely needed by end of 2024
with the first one coming in third quarter.
Also, PBoC may use open market operations, medium-term lending facilities and reserve requirements among other monetary policy tools to provide “strong” support for reasonable growth in credit
German Trade Balance surprised to the upside with Exports growing 3.70% mom in Nov and Imports growing at 1.90% mom. The trade deficit recorded a surplus of Eur 20.40 bn. The Factory Orders grew 0.30% mom, showing an improvement from the previous 3.80% mom contraction in the previous month. The economic sentiment registered a mild uptick but consumer confidence continues to be poor. The Retail Sales print was revised higher to 0.40% mom for Oct reading and registered a -0.30% contraction mom. EURUSD was largely supported on the data and richening of spread between the German and US 10Y yields and touched a high of 1.0979.
German Nov Industrial Production contracted 0.70% mom following a lower revised -0.30% mom.
Tokyo CPI excl Food and Energy for Dec rose 3.50% yoy from prior month reading of 3.60% yoy.
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