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(US) Market Trading Hours Summary: BOJ surprise keeps upward pressure on global interest rates
Tue, 20 Dec 2022 10:44 AM EST
Summary:
Stocks futures recovered after the BOJ jolted global markets by widening the tolerance range for their 10-year JGB yield control parameters. Global bond yields continued to track higher, after yet another major central bank offered a signal that change is on the way. The US dollar came under pressure led by a 3.5% rally in the Yen. Sentiment was further helped by news that it appears Congress has reached a deal on a spending bill. Housing data was mixed with building permits plummeting despite the more optimistic commentary we have heard on recent earnings conf calls, while starts have held up near pre-pandemic levels. Natural gas prices remained extremely volatile globally influenced by weather and geopolitical developments in Europe.
Overnight:
- Central Banks continue to be in focus on normalization process
- Japan’s BoJ tweaked the tolerance range for Yield control (unexpected hawkish shift and viewed as a prelude to more) but stressed it would take extra easing measures if needed (**Note: Most BOJ watchers had expected no changes in policy until Kuroda's 10-year term finished at the end of March). Major moves seen in Japan related assets as low liquidity engulfs year-end. Japan 10Y pushed to 7-year high. JPY strength weighed on USD/JPY
- Taiwan Dec Export Orders registered its biggest decline since 2009
-European Nov PPI cooler than expected for Germany and Poland as ECB’s Villeroy calmed fears of a hard landing in the EU; Current accounts improve for Euro Zone, Italy and Portugal. Greece C/A deficit widens.
-US Congress introduced $1.7T Govt funding bill; Including >$850B for defense spending and $2B for Taiwan weapons
US Session
-Freeport LNG export pipeline in Texas reportedly starts taking natural gas from pipelines - energy data provider
-(US) NOV HOUSING STARTS: 1.427M V 1.400ME; BUILDING PERMITS: 1.342M V 1.480ME (lowest permits since May 2020)
-(CA) CANADA OCT RETAIL SALES M/M: 1.4% V 1.5%E; RETAIL SALES (EX-AUTO) M/M: 1.7% V 1.3%E
-(US) Dec Philadelphia Fed Non-Manufacturing Regional Index: -17.1 v -13.6 prior
-(US) Weekly Redbook Sales w/e Dec 17th: +7.6% y/y; Dec MTD +6.4%
-USPS plans to electrify its trucks by 2026 - Washington Post
-(CO) Colombia Oct Trade Balance: -$1.5B v -$1.3Be
Europe and Asia
-(UK) Train drivers at 15 rail companies plan industrial action on Jan 5th - ASLEF Union
-(PT) Portugal Nov PPI M/M:0.0 % v -0.4% prior; Y/Y: 14.1% v 16.2% prior
-(RU) Unverified reports on explosions heard on Russia's West-Siberian gas pipeline connecting Ukraine & Europe with Russia's Urengoy gas field (world's second largest natural gas field)
-(HU) HUNGARY CENTRAL BANK (MNB) LEAVES BASE RATE UNCHANGED AT 13.00%; AS EXPECTED
-(IN) India Central Bank (RBI) Monthly Bulletin: Global inflation may have peaked but has broadened and become stubborn
-(UK) Chancellor of the Exchequer (Fin Min) Hunt: To announce new business energy bill aid early in 2023
-(ES) Spain Econ Min Calvino: 2022 GDP growth to be above budget forecast
-(US) NOV HOUSING STARTS: 1.427M V 1.400ME; BUILDING PERMITS: 1.342M V 1.480ME (lowest permits since May 2020); prior starts revised higher
-(EU) EURO ZONE DEC ADVANCE CONSUMER CONFIDENCE: -22.2 V -22.0E
Corporate Headlines
-MMM to stop producing Forever Chemical PFAS by end of 2025; Expects to incur pretax charges of ~$0.7-1.0B in Q4 2022
-GISTotal organic sales +11% y/y (volumes were down 6%, but price was up 17%); raises FY23 adj EPS +4-6% y/y, Adj Op profit +3-5% y/y, Organic net Rev +8-9% y/y
-FDS eps beats, organic ASV +8.8%; affirms FY outlook
-STLD to be added to S&P500; SMCI to be added to S&P500, SMCI added to S&P400
-AMZN confirms to have reached settlement in two cases with EU; Agrees not to use sellers' data for its own competing retail business and its private label products; Avoids fine of up to 10% of its global turnover
-SCS guides Q4 Rev short of consensus; Orders declined across all segments
-VRNA Ensifentrine meets primary and key secondary endpoints in Phase 3 ENHANCE-1 trial for COPD; NDA submission planned for 1H23
-NFLX According to subscription analytics firm Antenna, Netflix's new ad-supported plan was the least popular tier of its service during month of Nov when it was launched - US financial press
-WFC CFPB orders the bank to pay $3.7B for loan mismanagement
-Dow Jones +0.5%
- S&P 500 +0.5%
- Nasdaq +0.5%
- Russell 2000 +0.9%
Treasuries:
- US 2-yr: +2 bps at 4.272%
- 10-yr: +8 bps at 3.577%
- 30-yr: +12 bps at 3.725%
- 2-10 spread: +7 bps at -60bps
Commodities:
- Crude oil $76.07, +0.9%
- Gold $1,828/oz, +1.7%
- Silver $24.30 oz, 4.7%
- Copper $3.811/oz, +0.7%
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Information is for general use only, not to be used as advice.
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