In today’s briefing:
- Could Global Liquidity Skid Lower?
- Steno Signals #59 – When It Rains on Janet Yellen, It Pours!
- 11 Charts on US CPI: Hotter Headline and Weaker Core? An Odd Steepener Cocktail
- Australia and Japan Set to Lead Global Bear Steepening
- US Oil Inventories Log Biggest Ever Weekly Decline
- The Week That Was in ASEAN@Smartkarma – Cimory’s Growth, Cinema XXI, and Asian Plantations
Could Global Liquidity Skid Lower?
- Global Liquidity has been a key driver of risk assets, but it is starting to skid lower
- Problem is NOT tightening of liquidity by Central Banks, rather Collateral pools are wobbling in wake of Japan’s YCC change
- US Treasury markets face growing challenge from domestic coupon calendar, Fitch downgrade and threat from proposed gold-backed BRICS currency
Steno Signals #59 – When It Rains on Janet Yellen, It Pours!
- “Money grows on the tree of persistence.” – Japanese Proverb. Either you do Japan, or Japan will do you! We have been covering Japan extensively throughout the year and it saved us from being run over by a steepener-bus in markets over the past week.
- The Bank of Japan is still active in the JGB markets after having moved the needle on the YCC-cap, but they are much less interventionist than just 3 months ago.
- Japanese 2yr yields are now trading above 0% and the BoJ has not really been active in the 1-3yr space lately. This could be a signal that Governor Ueda now plans on guiding markets instead of buying them to keep volatility low.
11 Charts on US CPI: Hotter Headline and Weaker Core? An Odd Steepener Cocktail
- Happy Monday and welcome to our 11 charts on US CPI.
- US inflation will prove to be a mixed bag of goods in the coming months.
- Base effects in headline will be tough to beat, while core inflation is much more likely to dwindle in yearly terms over the next 2-3 months.
Australia and Japan Set to Lead Global Bear Steepening
- Due to conflicting factors, it has been a volatile week in the Australian and Japanese bonds and currencies.
- This week, the decisions and guidance from the ECB and BOJ have caused disruptions as they were out of consensus.
- The yield curve for Europe and Asia-Pacific 5-30 has begun to steepen.
US Oil Inventories Log Biggest Ever Weekly Decline
- US Oil Inventories Log Biggest Ever Weekly Decline US weekly oil inventories (ex SPR) fell by over 17 million barrels, as last weeks EIA data showed.
- This draw marked the largest weekly drop in history and shows that the US demand for oil remains strong – this fits an (at least in the mid-term) improving economic momentum picture that we painted in our latest macro outlook.
- Meanwhile, the divergence between the price of crude (reversed line in red) and the inventory data (black line) remains quite large.
The Week That Was in ASEAN@Smartkarma – Cimory’s Growth, Cinema XXI, and Asian Plantations
- The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
- The past week saw insights on Cisarua Mountain Dairy (CMRY IJ), Sheng Siong (SSG SP), and Cinema XXI IPO.
- There were also insights on SCG Decor IPO, Charoen Pokphand Indonesia, Malindo Feedmill, Halodoc and Astra International (ASII IJ), plus a sector insight on South-East Asia Plantations.
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