This time last week, everyone thought we’d all seen our last Friday.
Between dire predictions about Hurricane Irma and the threat of an imminent North Korea provocation, 10Y yields had plunged to below 2.02% and the dollar was trying to recover from an overnight dive that left everyone wondering where the bottom was.
Fast forward a week and everyone couldn’t be happier. The #failing Irma did some #bigly damage, but wasn’t as catastrophic as feared, and apparently, a missile launch on Friday is far preferable to a missile launch over the weekend as the urgency of buying the dip leaves no time for thinking through the ramifications of a rogue state firing projectiles over Japan.
It was the best week since Macron for the S&P which closed at a record high on Friday as did the Dow.
Good week for the dollar (best week for the Bloomberg dollar index since February). DXY pared gains mid-week, but is still up 0.9% since the end of last week:
10Y yields rose a truly impressive 18bps off last week’s YTD low:
USDJPY is up more than 3% from last Friday’s nadir…
…while the yen fell some 6% against the surging pound.
Speaking of the pound, it’s stolen the spotlight from the euro and the yuan in FX land. The BoE’s hawkish lean, Carney on board with a hike, and a dove-turned hawk in Gertjan Vlieghe led directly to this:
That of course made things tough for the FTSE which had a rough couple of days…
…and is now sitting at a 4-month low as the pound surges to a post-Brexit high:
This was the worst week of the year for the yuan, as weaker fixings combined with the removal of a reserve requirement on forwards did the trick in terms of reversing what seemed like an inexorable rally:
Best week for crude since July as WTI rose more than 5%. “The main reason prices moved up so sharply this week is the more bullish demand outlook epitomized by the IEA oil market report,” Michael Lynch, president of Strategic Energy & Economic Research said, stating the obvious. “People are looking for the price to go ahead and settle above $50 a barrel, but they need some more than just the current news,” he added.
EM credit spreads hit post-crisis lows (because what could go wrong?):
Bitcoin rebounded after plunging early Friday on fresh China crackdown news. So while there was some respite from the Jamie Dimon dip, things are looking rather tenuous of late:
Japanese shares not only shook off the North Korea news, they actually managed their best week since April, thanks in no small part to yen selling. Meanwhile, South Korean equities were similarly undeterred by the Kim threat, as the Kospi rose 1.8%, snapping a two-week losing streak:
Although it looks like domestic institutions were buying while foreign investors were selling:
Volatility spiked early on Friday following the missile launch, but fell throughout the session:
And so, here we are heading into the weekend on a completely different note than last weekend.
“It’s Friday, you ain’t got no Irma, and you ain’t got sh*% to worry about”…