In today’s briefing:
- Korea Exchange Plans to List Additional 39 Stock Futures and 6 Stock Options
- Positioning Watch: Markets Are Positioned for Softness (in Rates)
- US CPI Review: 50bp is OFF (In September)
- India: CPI Inflation Below Target for 2nd Month Signals Rapid Rate Cuts Ahead
- FOMC Preview for September 18: An One-Time Easing
- Thailand Politics: In Office but Not in Power? What Awaits Thailand’s Latest Premier
- [ETP 2024/37] Oil Prices Rebound but Weak Demand Limits Gains, Nat-Gas Rises on Output Cuts
- ECB: Noctober With Shifting Risks
Korea Exchange Plans to List Additional 39 Stock Futures and 6 Stock Options
- On 12 September, the Korea Exchange announced that it plans to list additional 39 stock futures (27 KOSPI and 12 KOSDAQ) and 6 stock options on 4 November.
- With these listings, the stock options will also be available for most of the top stocks in the stock market, including Samsung Biologics and Samsung Life Insurance.
- Given that shorting of stocks is still essentially banned in Korea, the use of stock futures and options are likely to be increasingly used by investors to improve risk management.
Positioning Watch: Markets Are Positioned for Softness (in Rates)
- Hello everyone, and welcome back to our weekly positioning watch.
- A lot is happening in markets ahead of what could be a significant turning point in sentiment, with the August CPI report landing in our inboxes at 14:30 CPH time.
- The debate between Harris and Trump seems to have set the tone in markets leading up to the event, with the USD selling off as markets agree that Trump is likely the more bullish of the two on USD.
US CPI Review: 50bp is OFF (In September)
- Today’s CPI report confirms that the 50bps cut markets were hoping for is now completely off the table, with markets currently pricing in only a 10% probability of such a scenario, compared to 50-60% just last week after the NFP report.
- We knew the energy component would deflate significantly this month, with retail gasoline prices down 20-25% during August.
- The overall report is actually not that hawkish beneath the surface—food prices are stable, used cars and trucks didn’t increase as much as feared, and the commodities part of the core component continues to deflate, despite transportation services and shelter lifting the overall print.
India: CPI Inflation Below Target for 2nd Month Signals Rapid Rate Cuts Ahead
- Headline CPI inflation stayed near 3.6%YoY for the second consecutive month in Aug’24, and core inflation remained benign at 3.4%YoY. A 25bp rate cut remains certain at the Oct’24 MPC.
- Although Sep-Oct’24 inflation is likely to average 5%YoY (because of base effects), the strong monsoon should deliver a bountiful kharif harvest, bringing headline inflation back down to 4%YoY in Jan-Mar’25.
- We expect the policy rate to decline by 25bp at each of the next four MPC meetings, to 5.5% by Apr’25. Rate sensitive sectors like banks, property, auto-companies will benefit.
FOMC Preview for September 18: An One-Time Easing
- With recent data raising concern about labor market weakness, and inflation down but not defeated, a cautious 25bps easing of the Fed Funds target likely.
- The statement is likely to leave the Fed’s options open to either accelerate or pause the pace of easing.
- The dots are likely to look quite dovish, particularly in comparison to June’s, but with a substantial variety of views.
Thailand Politics: In Office but Not in Power? What Awaits Thailand’s Latest Premier
- Thailand sees the third Shinawatra installed as its latest prime minister. Paetongtarn faces the same set of fundamental constraints that plagued her predecessor’s tenure.
- Cyclical economic weakness will mean that resuscitating growth is crucial to restore public support for her party, but she will find it hard to deliver much in terms of policy.
- Behind the scenes, the internecine tussle between the Shinawatras and the military-royalist establishment will continue to paralyze the government.
[ETP 2024/37] Oil Prices Rebound but Weak Demand Limits Gains, Nat-Gas Rises on Output Cuts
- For the week ending 06/Sept, US crude inventories increased by 0.8m barrels, lower than the 0.9m barrel forecast. Gasoline stockpiles rose unexpectedly, while distillate inventories grew more than anticipated.
- US natural gas inventories rise 40 Bcf for the week ending 06/Sep, lower than analyst expectations of a 49 Bcf buildup. Inventories are 9.6% above the 5-year seasonal average.
- BP, Occidental Petroleum, and Exxon Mobil see target price cuts. Schlumberger announces breakthrough in Lithium production.
ECB: Noctober With Shifting Risks
- The ECB’s unsurprising unanimous 25bp deposit rate cut in September provided little guidance on what’s next. It was not a no to cutting in October, but that seems unlikely.
- Forecasts are the current communication tool, and stability won’t justify a panicked acceleration of easing. We still expect the next 25bp ECB rate cut in December.
- Although risks skew dovishly for October, a historically optimistic call for productivity booming beyond profit norms presents hawkish risks to the ECB’s 2025 forecast.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
