Making Sense

For India, WPI rose 0.27% mom with Food masking the otherwise deceleration in prices of non food article / Fuel and Power / Manufactured Products. System Liquidity Deficit stood at Inr 224K crore and WACR traded at 6.69%.  The Governor of the Reserve Bank of India met with senior management from Public and Private Sector Banks, emphasizing vigilance in areas such as risk management, customer protection, and financial stability. Yield on IN10s opened lower at 7.10% after the 7.14% peak seen yesterday.  US yields pulled back sharply which could be attributed to the Fed Speakers dovish tone / lower Dec PPI revision and expectations of a softer PCE reading. S&P lifted off lows to close 0.90% higher on the day. The market is currently pricing in 97 bps of rate cuts into 2024.  Yields High Low Close DoD ▲ US 2Y          4.67      ...

Chains of habi t are too light to be felt until they are too heavy to be broken. After the EIA Inventory build-up and extension of OPEC Meet to 30 Nov in Vienna, Brent Crude Oil prices briefly dipped to $ 80.07 as OPEC will now hold it's next Ministerial meeting online as it discusses the production levels for next year. The reported delay is likely on account of disagreement over the production levels of African Nations. Angola and Nigeria, the cartel’s biggest African producers, disagree so far with production estimates supplied to OPEC by third-party analysts.  Price action was largely muted overnight as US markets were closed for Thanksgiving Holiday. Today, Asian markets are mixed.  Jibun Bank Nov flash manufacturing PMI came in at 48.1, lowest since February while flash services PMI came in at 51.7. Japan's Oct core inflation rate rose to 2.9% (prior 2.8%)and the headline print came in at 3.3%, Prior 3%. On China, Chinese regulators are considering allowing banks to exte...

 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 tigh...

In yesterday's trade, headline US retail sales grew 0.40% mom following a downwardly revised -0.70% mom for the month of March. The number was below market consensus for a 0.80% mom increase. Retail sales number after contracting in the month of Feb and Mar 23 turned positive in April. The core retails number or the control group numbers which show non discretionary spending rose 0.70% mom following a downwardly revised March figure of -0.40%. This number was sharply higher than consensus estimates of 0.30% increase. Despite the headline surprising to the downside, resilience of the core retail sales saw US treasury yields move higher as despite the negative shock and tightening credit conditions, consumer spending strength held. 2Y US Treasuries moved higher a full 16 bps to 4.12% before closing the session at 4.09% and 10Y US Treasuries moved 12 bps higher to 3.57% before closing the session at 3.54%. Remember, we are watching the formation of a H&S pattern on US Treasury yie...