Intraday Market Thoughts

Indices, Silver & Trade Winds

by Adam Button
Sep 23, 2019 14:01

Global equity indices are back in the red with silver sharply higher on conflicting signals from the US-China trade front. The Euro is on the backfoot after German PMI manufacturing sustained its shapest decline in a decade. Draghi's speech at the European Parliament starts at 9:00 am Eastern (2 pm London). Today's appearancees from Fed members include NY Fed's Williams, San Francisco Fed's Daly and St. Louis Fed's Bullard (who voted for a 50-bp rate cut last week). It is official, the Fed's liquidity injections are here to stay for another 3 weeks. GBP awaits Tuesday's UK Supreme Court ruling on the proroguing of Parliament. Euro shorts stormed back in the latest CFTC data. All 3 existing trades from the Premium Insights are in the green.

Indices, Silver & Trade Winds - Poll Qe4 (Chart 1)

Reports and denials about Chinese officials leave trade talks early highlighted the stakes in the precarious negotiations. Markets were roiled late on Friday on a report that Chinese officials had cancelled a planned trip to the US states or Montana and Nebraska. Risk trades dropped on a sign that talks had come undone; something that was underscored by Trump comments suggesting he didn't want a partial deal and was prepared to wait until after the election to get a full deal.

On the weekend, however, both sides released statements saying that mid-level talks had gone well and that top deputies will meet in October. A NYT report said the trips were cancelled by the Chinese side to avoid the appearance of political meddling in an area that has been hard hit by halted farm purchases. That led to early buying in yen crosses. It also underscored how sensitive markets will continue to be to any sign of success or failure in talks.

Click To Enlarge
Indices, Silver & Trade Winds - Premium Snapshot Tweet Dow Sep 20 2019 (Chart 2)

Looking ahead, GBP traders are eagerly awaiting Tuesday's UK Supreme Court ruling on the proroguing of parliament. In the US, the September prelim US PMIs from Markit are due at 1345 GMT. The manufacturing reading is expected at 50.4 and services at 51.5; both improvements from August. Fedspeak includes Williams, Daly and Bullard. Silver outperforms all, while gold pulls back from Sunday night's high as the Gold/Silver ratio eases back following a sharp rebound.

Fed's Injections Extended to Oct 10

After four bouts of injections last week, the Federal Reserve has decided to hold overnight repo operations for up to $75b DAILY through Oct 10th, as well as three 14-day term repo operations on Sept. 24, Sept. 26 and Sept. 27.

CFTC Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR -69K vs -50K prior GBP -86K vs -92K prior JPY +24K vs +33K prior CHF -5K vs -7K prior CAD +20K vs +12K prior AUD -59K vs -61K prior NZD -36K vs -30K prior

Euro shorts had faded to 39K at the start of the month but they have been rebuilding in the past few weeks and are at the most extreme since mid-June. The divergence in CAD positioning versus the antipodeans continues to diverge.

Act Exp Prev GMT
Flash Manufacturing PMI
50.3 50.3 Sep 23 13:45
Eurozone Flash PMI Manufacturing
45.6 47.6 47.0 Sep 23 8:00
Germany Flash PMI Manufacturing
41.4 44.6 43.5 Sep 23 7:30
FOMC's Williams Speaks
Sep 23 13:50
FOMC's Bullard Speaks
Sep 23 17:00
RBA Gov Lowe Speaks
Sep 24 9:55

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