!css

19 December 2019

19/12/2019

Market Data and Morning Chat

Morning Chat 

This is the penultimate chat of the decade as the usual Christmas hiatus looms

Don’t drink, don’t smoke, what do you do? The UK Office of National Statistics released November’s consumer inflation report yesterday and it made tame reading. Almost any way you slice it, inflation’s benign. CPI? 1.5% year-on-year and 0.1% up on last month. Producer price inflation for outputs – essentially the cost from producers? +0.5% year-on-year and lower than October. Ah-ha, retail price inflation – trusty ole’ RPI? Up a lofty, err, only 2.2%, 0.1% higher than last month but near target. If you don’t smoke, drink or eat out, inflation will feel marginally higher, but really, for now, inflation’s not a worry.

Subtle innuendos follow: However, oil’s a bit pumped up of late – could it not trigger inflation? Looked at over the short period (the last week or two) oil prices have been rising.  Early October, West Texas Intermediate was $52½ a barrel and Brent $57½; they’re $61 and $66 today, $9 higher – a decent c15%. But go back to July or even March and prices today are almost unchanged. Indeed, prices have been somewhat range-bound for over two years. You’re not going to get much of a rise out of inflation when oil prices are not giving the trend a prod.

Goody two-shoes – or is there something? The US House of Representatives held impeachment votes over two charges – did the President abuse his power in pressuring Ukraine, and did he obstruct Congress? Nancy Pelosi compared Democrat actions to fighting World War II’s Battle of the Bulge. Republicans call it a “political hit job”. Meanwhile, polls have seen Trump’s approval rating rise to 43.4% - some of his highest since day 60 of his tenure – while impeachment support shifted lower to 47.2%. It implies the public see hit job more than bulge. Oh, and the votes? The Democrats were adamant to impeach.

Futures remain sluggish moving only 0.02-0.03% seemingly waiting for the trade deal signing.
Bank of Japan holds rates steady – The Bank of England is expected to do the same today
… But markets anticipate the Swedish Riksbank will end its policy of negative rates 
German Ifo Business Climate index showed signs of improvement at best level in half a year
Meggitt (-2.6%) seated at the bottom of the UK equity movers over 737Max production hold

Market Data

Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +0.00 (+0.00%) at 1,366 (YTD: 26.05%; 5YR: 57.4%)
MSCI AC World Equities (USD) down -13.52 (-0.14%) at 9,866 (YTD: 26.95%; 5YR: 54.0%)
Barclays Global Aggregate Bonds down -1.15 (-0.23%) at 509 (YTD: 6.28%; 5YR: 11.4%)
    
Selected Equity Indices (Capital returns)    
S&P 500 down -1.38 (-0.04%) at 3,191 (YTD: 27.30%; 5YR: 54.1%)    
NASDAQ up +4.38 (+0.05%) at 8,828 (YTD: 33.04%; 5YR: 85.2%)    
Euro STOXX 50 down -6.28 (-0.17%) at 3,739 (YTD: 24.57%; 5YR: 19.0%)    
FTSE 100 up +15.47 (+0.21%) at 7,541 (YTD: 12.08%; 5YR: 15.2%)    
CAC down -8.66 (-0.15%) at 5,960 (YTD: 25.98%; 5YR: 40.5%)    
DAX down -65.67 (-0.49%) at 13,222 (YTD: 25.22%; 5YR: 35.1%)    
Nikkei 225  down -69.58 (-0.29%) at 23,865 (YTD: 19.24%; 5YR: 35.4%)    
Hang Seng down -124.60 (-0.45%) at 27,760 (YTD: 7.41%; 5YR: 20.1%)    
MSCI Emerging Markets up +6.58 (+0.60%) at 1,109 (YTD: 14.85%; 5YR: 17.4%)    
    
Selected Government Bond Yields    
US 2 Year up +0.00 at 1.63 (began the year at 2.49; 5 years ago it was 0.64)    
US 10 Year up +0.01 at 1.92 (began the year at 2.68; 5 years ago it was 2.16)    
UK 10 Year up +0.01 at 0.78 (began the year at 1.28; 5 years ago it was 1.85)    
Germany 10 Year up +0.01 at -0.24 (began the year at 0.24; 5 years ago it was 0.59)    
France 10 Year up +0.02 at 0.07 (began the year at 0.70; 5 years ago it was 0.89)    
Italy 10 Year down 0.00 at 1.34 (began the year at 2.74; 5 years ago it was 1.95)    
Japan 10 Year up +0.02 at -0.01 (began the year at -0.01; 5 years ago it was 0.35)    
Barclays EM Basket up +0.05 at 4.29 (began the year at 6.22; 5 years ago it was 5.44)
    
Selected Currencies    
$ weakened -0.0012 versus € (-0.11%) at 1.1130 ($: YTD: 2.81%; 5YR: 9.1%)    
€ weakened -0.0010 versus £ (+0.08%) at 1.1779 (€: YTD: -5.51%; 5YR: 8.3%)    
$ weakened -0.0026 versus £ (-0.20%) at 1.3109 ($: YTD: -2.85%; 5YR: 16.1%)    
¥ strengthened +0.0200 versus $ (+0.02%) at 109.5900 (¥: YTD: -0.06%; 5YR: 9.0%)    
    
Selected Commodities    
Brent Crude ($/bbl) up +0.04 (+0.06%) at 67.83 (YTD: 27.57%; 5YR: 10.7%)    
WTI Crude ($/bbl) down -0.01 (-0.02%) at 60.93 (YTD: 34.18%; 5YR: 12.6%)    
Gold ($/ozt) up +1.80 (+0.12%) at 1476.61 (YTD: 15.22%; 5YR: 23.4%)    
Copper ($/mt) down -25.50 (-0.41%) at 6174.50 (YTD: 3.51%; 5YR: -2.2%)    
    
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