!css

14th May 2020

14/05/2020

Market Data and Morning Chat

Morning Chat

Positive on not going negative: US President Donald Trump has tweeted (obviously) for it and even market futures have priced it in, but Federal Reserve Chairman Jerome Powell is positively adamant the Fed Funds rate is not going negative. In a video-speech for the Peterson Institute for International Economics, Powell acknowledged “the path ahead is uncertain and further support may be needed - knocking global equity markets., He argued for fiscal measures, which House Democrats are preparing. As for negative rates, he noted “there are fans” (Trump) but unequivocally not one member of the Fed committee are proposing the move.

No longer barreling along: Just like equities yesterday, oil prices also slipped a couple of percent despite some early inklings a supply balance may be near. With the unlocking of some of the tighter controls of the European sequesterings, petrol usage has begun to climb.  Over in the US, the Energy Information Administration released their inventory data for the week to May 8 showing a 700,000 barrel draw from inventories. It does run against the American Petroleum Institute’s 7.6million barrel build, but couple the news with a second week’s draw in gasoline inventories, and there may be an equilibrium building.

Courting options: ECB Vice President Luis de Guindos noted Europe may have “hit bottom in terms of contraction”. Upbeat news. So the last thing needed is a spanner in the works, but the German Constitutional Court ruling requiring the ECB properly explain its bond purchase policy threatens to stop Bundesbank support for “whatever it takes”. Moreover, it poses a challenge to the primacy of the European Court of Justice as the court already ruled the actions appropriate & within the bank’s mandate. Chancellor Angela Merkel’s vowed to respond to the German court and defend the Euro, but it’s a tough spanner to wrench out.

Powell’s more-to-do comments continue to weight on sentiment as equity futures trade down
 … But Treasury Secretary Steven Mnuchin sees the 2021 silver lining in Powell’s assessment
The UK Department of Health approved Roche’s (+0,4%) Covid-19 antibody test 
Another of Angela’s actions is a planned June 15 easing Germany’s broader border closures
Italy has adopted a new €55billion Covid-19 package to help battered businesses and families
Commerzbank (-7,1%) profits remain in check as they follow the trend for increased provisions
Salmon-farmer Mowi’s (+0.9%) Chilean numbers scaled back, but nothing too fishy overall
Cisco (-0.6%) routes profits beat through rise in demand for work-from-home tools & equipment

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -17.11 (-1.42%) at 1,191 (YTD: -13.37%; 5YR: 27.7%)
MSCI AC World Equities (USD) down -151.32 (-1.74%) at 8,535 (YTD: -14.47%; 5YR: 25.4%)
Barclays Global Aggregate Bonds down -0.05 (-0.01%) at 516 (YTD: 0.83%; 5YR: 14.5%)
 
Selected Equity Indices (Capital returns)
S&P 500 down -50.12 (-1.75%) at 2,820 (YTD: -12.71%; 5YR: 32.9%)
NASDAQ down -139.38 (-1.55%) at 8,863 (YTD: -1.22%; 5YR: 75.5%)
Euro STOXX 50 down -73.65 (-2.55%) at 2,811 (YTD: -24.95%; 5YR: -22.0%)
FTSE 100 down -90.72 (-1.51%) at 5,904 (YTD: -21.72%; 5YR: -15.3%)
CAC down -127.55 (-2.85%) at 4,345 (YTD: -27.32%; 5YR: -13.6%)
DAX down -276.84 (-2.56%) at 10,543 (YTD: -20.43%; 5YR: -8.8%)
Nikkei 225  down -352.27 (-1.74%) at 19,915 (YTD: -15.82%; 5YR: 1.8%)
Hang Seng down -352.81 (-1.46%) at 23,827 (YTD: -15.47%; 5YR: -12.7%)
MSCI Emerging Markets down -0.11 (-0.01%) at 909 (YTD: -18.43%; 5YR: -12.2%)
 
Selected Government Bond Yields
US 2 Year down -0.01 at 0.15 (began the year at 1.57; 5 years ago it was 0.54)
US 10 Year down -0.03 at 0.62 (began the year at 1.92; 5 years ago it was 2.23)
UK 10 Year down -0.04 at 0.21 (began the year at 0.82; 5 years ago it was 1.98)
Germany 10 Year down -0.02 at -0.55 (began the year at -0.19; 5 years ago it was 0.70)
France 10 Year down -0.02 at -0.07 (began the year at 0.12; 5 years ago it was 0.97)
Italy 10 Year down 0.00 at 1.80 (began the year at 1.41; 5 years ago it was 1.85)
Japan 10 Year down 0.00 at -0.01 (began the year at -0.02; 5 years ago it was 0.45)
Barclays EM Basket down -0.03 at 3.73 (began the year at 4.27; 5 years ago it was 5.09)
 
Selected Currencies
$ strengthened +0.0018 versus € (+0.17%) at 1.0804 ($: YTD: 3.78%; 5YR: 5.1%)
€ strengthened +0.0010 versus £ (-0.09%) at 1.1289 (€: YTD: 4.64%; 5YR: 22.7%)
$ strengthened +0.0032 versus £ (+0.26%) at 1.2195 ($: YTD: 8.05%; 5YR: 22.6%)
¥ strengthened +0.1500 versus $ (+0.14%) at 106.8500 (¥: YTD: -1.62%; 5YR: 11.5%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.08 (-0.29%) at 27.77 (YTD: -58.19%; 5YR: -57.8%)
WTI Crude ($/bbl) down -0.49 (-1.90%) at 25.29 (YTD: -58.58%; 5YR: -58.2%)
Gold ($/ozt) up +3.08 (+0.18%) at 1715.10 (YTD: 12.63%; 5YR: 40.0%)
Copper ($/mt) down -32.50 (-0.62%) at 5224.00 (YTD: -15.39%; 5YR: -18.4%)

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros