CURRENCY MARKET WRAP
As of Mon 16 Dec, Singapore Time zone UTC+8
U.S. Dollar Index, -0.22%, 97.171
USDJPY, +0.00%, 109.39
EURUSD, +0.04%, 1.1125
GBPUSD, +0.21%, 1.3354
USDCAD, +0.14%, 1.3187
AUDUSD, -0.01%, 0.6875
NZDUSD, -0.11%, 0.6592
U.S. Total Retail Sales increased 0.2% m/m in November (consensus 0.5%) following an upwardly revised 0.4% increase (from 0.3%) in October. Excluding autos, retail sales rose 0.1% (consensus 0.4%) after an upwardly revised 0.3% increase (from 0.2%) in October.
U.S. and China finally reached a Phase One trade deal that prevented the Dec. 15 tariffs from taking effect. Specifically, the tariff rate on $250 billion of Chinese imports will remain at 25%, the tariff rate on $120 billion of Chinese imports will be cut to 7.5% from 15%, and China will try to purchase $40-50 billion in U.S. farm goods, although this latter part has yet to be solidified. A deal will reportedly be signed in early January.
Trump said Phase Two discussions will begin immediately, which should focus on issues pertaining to forced technology transfers and IP rights, according to NEC Director Kudlow. The market’s muted reaction to the partial deal was presumably attributed to it already being priced into the market’s record run. Some skepticism about the limited details and China’s commitment lingered.
U.S. Treasuries reversed the bulk of yesterday’s sell-off, driving yields noticeably lower across the curve. The 2-yr yield fell seven basis points to 1.60%, and the 10-yr yield fell eight basis points to 1.82%. The U.S. Dollar Index declined 0.2% to 97.20. WTI crude rose 1.6%, or $0.93, to $60.11/bbl.
Separately, UK Prime Minister Boris Johnson’s Conservative Party easily won the general election, paving the way for a Brexit by the end of January. UK’s FTSE rose 1.1%, and the British pound rallied 1.4% against the dollar to 1.3339.
STOCK MARKET WRAP
S&P500, +0.21%, 3,178.62
Nasdaq, +0.49%, 8,535.75
Nikkei Futures, -0.28%, 23,892.5
The S&P 500 energy (-0.9%), materials (-0.8%), and financials (-0.5%) sectors did some pulling back, while the utilities (+0.8%) and information technology (+0.6%) sectors outperformed. Shares of Apple (AAPL 275.15, +3.69, +1.4%) climbed further into record territory.
The Philadelphia Semiconductor Index (-0.6%) was pressured by a negative reaction to Broadcom’s (AVGO 315.42, -12.38, -3.8%) earnings report. Oracle (ORCL 54.51, -1.96, -3.5%) and Costco (COST 291.87, -5.47, -1.8%) also had disappointing earnings-based reactions, while Adobe (ADBE 317.94, +11.98, +3.9%) outperformed following its results.