Well, it’s Friday and this week has been just as interesting as last week.
Today we’ll get more health care bill drama, which is all anyone will care about and/or talk about.
Overnight, the dollar found its footing against the yen as 10Y yields rise on what I guess you could say was “optimism” around the notion that Trump’s ultimatum will win the day in terms of pushing Congress to vote on the GOP health bill (it’s almost as if everyone has forgotten that just getting a vote isn’t a “victory”, you actually need to win that vote).
“The dollar snaps its longest-losing streak in six years against the yen as Treasury yields rise on bets the U.S. House Republican leaders will muster enough votes Friday to pass their embattled health-care bill,” Bloomberg wrote overnight, adding that this would be the first gain for USDJPY in 9 days.
Don’t forget what the long-term picture looks like here:
Remember, the yen is something of a real-time barometer for the reflation trade and as such, it’s moving in lockstep with news out of Washington.“Dollar-yen is rising on real demand around mid-110 levels and short-covering ahead of the weekend,” David Lu, director of NBC Financial Markets Asia said Friday. “Trading range has come down to 110-113 from 112-115 given the delay in vote for a U.S. health-care bill [as the] key test is 112, a rise above that may prompt more players to turn dollar buyers.”
In a testament to just how sensitive USDJPY is to this vote, the yen vol curve is the only one inverted among the majors. “While volatility curves in the euro, the pound and the Swiss franc are mainly driven by risks surrounding French elections, the yen is dictated by developments in the U.S. Congress,” Bloomberg notes, adding that because there’s “still no clarity on whether House Republican leaders can gather enough votes to pass a key health-care bill, yen’s term structure has inverted.”
Meanwhile, we got some PMI data out of Europe that exactly no one reading this probably cares about. That said, here it is on the off chance you’re interested:
- Eurozone March Flash Composite PMI 56.7; Est. 55.8
- France March Flash Manufacturing PMI 53.4; Est 52.4
- France March Flash Composite PMI 57.6 Vs 55.9; Est 55.8
- Germany March Flash Composite PMI 57; Est 56
- Germany March Flash Manufacturing PMI 58.3; Est 56.5
That headline print (the one in bold) is the highest reading in six years (give or take):
Crude is set for its third weekly drop this month ahead of this weekend’s meeting in Kuwait where OPEC will get together and
laugh heartily at the notion they’re irrelevant discuss how much progress has been made on the output cuts.
“We expect prices to stay in that $47 to $50 range in the next few weeks because of that stockpile build,” Evan Lucas, market strategist at IG Ltd. in Melbourne said. “It’s unlikely that will change unless OPEC comes out and says ‘we stand by the output agreement and we are going to instigate extending it now rather than just talk about pushing it back.'”
Thanks Evan, you’re exactly right.
Here’s a snapshot of global markets:
- Nikkei up 0.9% to 19,262.53
- Topix up 0.9% to 1,543.92
- Hang Seng Index up 0.1% to 24,358.27
- Shanghai Composite up 0.6% to 3,269.45
- Sensex up 0.5% to 29,488.44
- Australia S&P/ASX 200 up 0.8% to 5,753.55
- Kospi down 0.2% to 2,168.95
- FTSE 7327.95 -12.76 -0.17%
- DAX 12022.69 -16.99 -0.14%
- CAC 5008.24 -24.52 -0.49%
And the docket in the US:
- 8:30am: Durable Goods Orders, est. 1.3%, prior 2.0%
- 8:30am: Durables Ex Transportation, est. 0.6%, prior 0.0%
- 8:30am: Cap Goods Orders Nondef Ex Air, est. 0.5%, prior -0.1%
- 8:30am: Cap Goods Ship Nondef Ex Air, est. 0.21%, prior -0.4%
- 9:45am: Markit US Manufacturing PMI, est. 54.8, prior 54.2
- 9:45am: Markit US Services PMI, est. 54, prior 53.8
- 9:45am: Markit US Composite PMI, prior 54.1
- 10am: Revisions: Wholesale sales and inventories
- 8am: Fed’s Evans Speaks at Community Development Event
- 9:05am: Fed’s Bullard to Speak to Economic Club of Memphis
- 10am: Fed’s Dudley Speaks in New York at York College
- 1:30pm: Fed’s Williams Speaks in Q&A