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11 July 2019

11/07/2019

Market Data and Morning Chat

Morning Chat

Wasn’t that what he said June 3rd? Well, not identically. Yesterday’s prepared remarks to Congress by Fed chairman Powell stated the Fed “would act as appropriate to sustain the expansion” not June 3’s “will act”. Semantically, will is technically stronger than would, but the Fed’s tea leaves probably don’t need to be read so closely. For bond investors, the text is strong enough to continue to anticipate an effectively certain rate cut in July – especially with “uncertainties” having “increased”. Meanwhile equity markets are going along for the ride. Wouldn’t you know it, we will have to wait and see.

So the UK’s a bit of a grower: The Office of National Statistics compiles single and rolling three month GDP estimates, and yesterday saw May’s estimates. Forecasters expected a +0.3% rebound after April’s inventory-reduction-driven -0.4% and lo and behold they were correct. As for the rolling three month, forecasters called for only +0.1% but it came in at +0.3% (always wonder how you can get the month right but not the three-month when you already have two data points!). Anyway, that’s a decent rebound. Maybe not enough to stop a negative Q2, but should save a technical recession in Q3.

Oil’s had a bit of a spurt: Yesterday alone, Brent Crude bubbled up 4.4% and West Texas Intermediate rose 4.6% (WTI’s first trip over $60 in two years) on the Energy Information Administration’s (EIA) oil inventories. Seasonally, inventories should be declining and forecasts looked for a reasonable 1.1million barrel draw. However, both the American Petroleum Institute and EIA reported much higher draws – 8.13 barrels and 9.5million respectively. Couple those big draws with news that staff are being evacuated from some offshore platforms in anticipation of a tropical storm, and it’s no wonder prices are up. Should help energy stocks too.

The S&P500 has cracked 3,000 for the first time on Powell’s dovish tones
Link Fund Solutions allows Neil Woodford fund holders to transfer from Hargreaves Lansdown
FTSE100 stock Micro Focus drops 11.7% as they fail to find a good solution to first half earnings
Micron continues its climb, up 3.8% to $42.90 as they announce new senior debt offering
Sir Kim Darroch has resigned as UK’s ambassador to the US, which isn’t wholly unexpected
EU Commission president-nominee Ursula von der Leyen is struggling to find enough support

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +3.47 (+0.27%) at 1,276 (YTD: 17.80%; 5YR: 52.8%)
MSCI AC World Equities (USD) up +31.52 (+0.34%) at 9,222 (YTD: 18.66%; 5YR: 43.7%)
Barclays Global Aggregate Bonds up +0.31 (+0.06%) at 503 (YTD: 5.01%; 5YR: 5.8%)

Selected Equity Indices (Capital returns)
S&P 500 up +13.44 (+0.45%) at 2,993 (YTD: 19.40%; 5YR: 52.1%)
NASDAQ up +60.80 (+0.75%) at 8,203 (YTD: 23.62%; 5YR: 85.8%)
Euro STOXX 50 down -8.23 (-0.23%) at 3,502 (YTD: 16.66%; 5YR: 10.9%)
FTSE 100 down -5.78 (-0.08%) at 7,531 (YTD: 11.93%; 5YR: 12.6%)
nlowson1 down -4.51 (-0.08%) at 5,568 (YTD: 17.69%; 5YR: 29.0%)
DAX down -63.14 (-0.51%) at 12,373 (YTD: 17.18%; 5YR: 28.0%)
Nikkei 225 up +110.05 (+0.51%) at 21,644 (YTD: 8.14%; 5YR: 42.7%)
Hang Seng up +210.58 (+0.75%) at 28,415 (YTD: 9.94%; 5YR: 22.3%)
MSCI Emerging Markets up +6.48 (+0.62%) at 1,049 (YTD: 8.61%; 5YR: -0.9%)

Selected Government Bond Yields
US 10 Year down -0.02 at 2.04 (began the year at 2.68; 5 years ago it was 2.52)
US 2 Year down -0.02 at 1.81 (began the year at 2.49; 5 years ago it was 0.45)
UK 10 Year up +0.04 at 0.76 (began the year at 1.28; 5 years ago it was 2.60)
Germany 10 Year up +0.04 at -0.27 (began the year at 0.24; 5 years ago it was 1.20)
France 10 Year down -0.01 at -0.03 (began the year at 0.70; 5 years ago it was 1.64)
Italy 10 Year down -0.02 at 1.71 (began the year at 2.74; 5 years ago it was 2.89)
Japan 10 Year down -0.02 at -0.14 (began the year at -0.01; 5 years ago it was 0.53)
Barclays EM Basket up +0.01 at 5.88 (began the year at 6.22; 5 years ago it was 5.29)

Selected Currencies
$ weakened -0.0010 versus € (-0.09%) at 1.1269 ($: YTD: 1.60%; 5YR: 17.2%)
€ weakened -0.0001 versus £ (+0.01%) at 1.1116 (€: YTD: 0.13%; 5YR: 13.2%)
$ weakened -0.0013 versus £ (-0.10%) at 1.2526 ($: YTD: 1.73%; 5YR: 26.8%)
¥ strengthened +0.4300 versus $ (+0.40%) at 107.9800 (¥: YTD: -1.56%; 5YR: -6.2%)

Selected Commodities
Brent Crude ($/bbl) up +0.65 (+0.98%) at 67.16 (YTD: 26.31%; 5YR: -36.5%)
WTI Crude ($/bbl) up +2.60 (+4.50%) at 60.43 (YTD: 33.08%; 5YR: -41.3%)
Gold ($/ozt) up +1.79 (+0.13%) at 1420.77 (YTD: 10.79%; 5YR: 6.1%)
Copper ($/mt) up +118.00 (+2.03%) at 5940.00 (YTD: -0.42%; 5YR: -17.1%)

Data sourced from Bloomberg as of the close of last trading day.
YTD = Year-to-date return; 5YR = five year return

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros