CURRENCY MARKET WRAP 

As of Fri Oct 18th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.41%, 97.60
USDJPY, -0.17%, $108.58
EURUSD, +0.47%, $1.1125
GBPUSD, +0.26%, $1.2865
USDCAD, -0.50%, $1.3137
AUDUSD, +0.99%, $0.6825
NZDUSD, +0.99%, $0.6354

U.S. Total housing starts declined a disappointing 9.4% m/m in September to a seasonally adjusted annual rate of 1.256 million (consensus 1.306 million). Building permits declined 2.7% to a seasonally adjusted annual rate of 1.387 million (consensus 1.350 million). Industrial production declined 0.4% m/m in September (consensus -0.3%) on the heels of an upwardly revised 0.8% increase (from 0.6%) in August. Total capacity utilisation dropped to 77.5% (consensus 77.7%) from 77.9% in August. Philadelphia Fed Index for October checked in at 5.6 (consensus 6.0) versus 12.0 in September.

U.S. Treasuries finished the session on a lower note. The 2-yr yield increased two basis points to 1.61%, and the 10-yr yield increased one basis point to 1.76%. The U.S. Dollar Index declined 0.41% to 97.60. WTI crude rose 0.9%, or $0.47, to $53.89/bbl despite crude inventories rising more than expected in the EIA’s weekly inventory report.

In Brexit, UK finally convinced the EU to endorse their Brexit withdrawal agreement. When the announcement was made, Sterling jumped more than 1.32% in a matter of minutes. However it sold off just as quickly as investors turned their focus to the odds of Parliamentary approval. Boris Johnson insisted he is “very confident” that his Brexit deal will be approved by the House of Commons in a historic knife-edge vote on Saturday, even without the backing of the DUP. Without the DUP’s 10 MPs, Johnson is likely to need the support of some Labour MPs and the 21 Conservatives he expelled from the parliamentary party for backing the Benn act last month.

If they approve the new withdrawal agreement, there are 2 paths. Parliament fast tracks the deal into UK law and they leave the EU on October 31st as scheduled or they get a technical extension to debate the details and set a new date for departure. In the EU’s eyes, a deal is done so they’ll agree to any extension.

STOCK MARKET WRAP 

S&P500, +0.28%, 2,997.95
Nasdaq, +0.40%, 8,156.85
Nikkei Futures, +0.12%, 22,517.5

S&P 500 advanced 0.28% on Thursday, as investor sentiment remained relatively upbeat following another batch of decent earnings reports and news of a draft Brexit deal.

Gains were still registered in ten of the 11 S&P 500 sectors, though, with the lone exception being information technology (-0.2%) after IBM (IBM 134.26, -7.85, -5.5%) missed revenue estimates. The health care (+0.8%), real estate (+0.7%), and communication services (+0.6%) sectors outperformed the broader market.

In the industrials sector (+0.5%), positive reactions to results from Honeywell (HON 167.55, +3.92, +2.4%), CSX (CSX 69.78, +0.78, +1.1%), United Rentals (URI 127.92, +6.25, +5.1%), and Dover (DOV 101.38, +5.56, +5.8%) outweighed the relative weakness in the defense stocks after Textron (TXT 47.79, -2.68, -5.3%) commented about lower defense volume.

The health care space outperformed on optimism that a $50 billion package offered by five companies could settle the opioid lawsuits. Companies involved include Johnson & Johnson (JNJ 136.17, +1.00, +0.7%), Teva Pharma (TEVA 7.77, +0.82, +11.8%), McKesson (MCK 150.51, +5.67, +3.9%), Cardinal Health (CAH 51.21, +2.14, +4.4%), and AmerisourceBergen (ABC 89.50, +3.45, +4.0%).

In other earnings news, Netflix (NFLX 293.35, +7.07, +2.5%) provided results that were construed as better than feared. Shares gained 2.5% but were up as much as 7.9% intraday. Morgan Stanley (MS 43.44, +0.65, +1.5%) topped expectations.

CURRENCY MARKET WRAP 

As of Thu Oct 17th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.30%, 97.99
USDJPY, -0.17%, $108.68
EURUSD, +0.39%, $1.1076
GBPUSD, +0.26%, $1.2821
USDCAD, +0.03%, $1.3203
AUDUSD, +0.05%, $0.6757
NZDUSD, -0.10%, $0.6288

U.S. Retail Sales declined 0.3% month-over-month in September (consensus +0.3%) following an upwardly revised 0.6% increase (from +0.4%) in August. Excluding autos, retail sales declined 0.1% (consensus +0.2%) after increasing an upwardly revised 0.2% (from 0.0%) in August. Upward revisions for August cushioned some of the headline blow, yet the key takeaway from the report is that it highlights some relatively conservative consumer spending activity in September that will feed into the slowdown narrative building for the U.S. economy.

U.S. Treasuries finished the session on a higher note, leaving yields slightly lower. The 2-yr yield and the 10-yr yield both declined two basis points each to 1.59% and 1.75%, respectively. The U.S. Dollar Index declined 0.3% to 98.02.

In trade, China threatened unspecified countermeasures against the U.S. after the House of Representatives approved legislation to support pro-democracy protesters in Hong Kong. The Senate has yet to vote on the measures, but the situation could complicate the completion of the first phase of a trade deal with the U.S.

STOCK MARKET WRAP 

S&P500, -0.20%, 2,989.69
Nasdaq, -0.30%, 8,124.18
Nikkei Futures, +1.20%, 22,467.5

Wall Street finished little changed on Wednesday, as investors weighed negative macro news against another set of mostly positive earnings results. The positive reaction to today’s batch of earnings reports was limited to shares of companies that reported, namely Bank of America (BAC 30.18, +0.45, +1.5%), United Airlines (UAL 89.70, +1.82, +2.1%), and J.B. Hunt Transport Services (JBHT 115.65, +4.05, +3.6%), as opposed to Tuesday’s earnings-driven rally. Eight of the 11 S&P 500 sectors closed near their flat lines.

In other potential deals, General Motors (GM 36.65, +0.39, +1.1%) and the UAW reached a tentative agreement that could end the monthlong strike at GM. McKesson (MCK 144.84, +6.67, +4.8%), Cardinal Health (CAH 49.07, +1.17, +2.4%) and AmerisourceBergen (ABC 86.05, +2.85, +3.4%) began talks to settle opioid litigation for $18 billion, according to The Wall Street Journal.

Netflix soared more than 10% in extended trading Wednesday after the company released its earnings report for the third quarter. The company reported mixed results, with an earnings beat and a miss on domestic subscriber adds, while revenue slightly missed analysts’ expectations. Earnings per share: $1.47 vs. $1.04 expected. Revenue: $5.24 billion vs. $5.25 billion expected. Domestic paid subscriber additions: 517,000 vs. 802,000 expected. International paid subscriber additions: 6.26 million vs. 6.05 million expected.

CURRENCY MARKET WRAP 

As of Wed Oct 16th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.14%, 98.31
USDJPY, +0.38%, $108.81
EURUSD, +0.05%, $1.1034
GBPUSD, +1.21%, $1.2760
USDCAD, -0.21%, $1.3205
AUDUSD, -0.32%, $0.6753
NZDUSD, -0.06%, $0.6295

U.S. Empire State Manufacturing Survey for October, increased to 4.0 (consensus -1.0) from 2.0. Trade news continued to make headlines, although the muted reaction likely reflected some exhaustion to trade speculation. “People familiar with the matter” told Bloomberg News that China may struggle fulfilling part of its agreement to purchase $50 billion of U.S. agricultural goods unless Trump lifts retaliatory tariffs.

U.S. Treasuries finished near their session lows, leaving yields slightly higher. The 2-yr yield increased one basis point to 1.61%, and the 10-yr yield increased two basis points to 1.77%. The U.S. Dollar Index declined 0.14% to 98.31. WTI crude declined 1.4%, or $0.76, to $53.55/bbl.

With 16 days left before the UK is scheduled to leave the European Union, a Brexit deal is in sight, but its important for investors to tread cautiously because of the inevitable resistance from the DUP and reports from “senior EU officials” that its “way too premature” to assume that a Brexit deal is imminent. Johnson will still have to win over parliament – including the Democratic Unionist party (DUP) and the hardline Tory Brexiters of the European Research Group (ERG) – on the basis that, under the deal, Northern Ireland will still legally be within the UK’s customs territory. Nonetheless sterling and many other major currencies traded sharply higher today on reports that EU and UK Brexit negotiators are close to a deal after Boris Johnson agreed to have a customs border down the Irish Sea.

STOCK MARKET WRAP 

S&P500, +1.00%, 2,995.68
Nasdaq, +1.24%, 8,148.71
Nikkei Futures, +1.86%, 22,497.5

The S&P 500 rose 1.0% on Tuesday, as JPMorgan Chase (JPM 119.96, +3.51, +3.0%), UnitedHealth (UNH 238.59, +18.00, +8.2%), and Johnson & Johnson (JNJ 132.84, +2.12, +1.6%) kicked off the third quarter reporting season with better-than-expected earnings results.

Most of today’s advance came in the early going. The S&P 500 opened just 0.3% higher, and it quickly pushed to session highs amid news that the EU and UK are nearing a draft Brexit deal and that General Motors (GM 36.26, +0.76, +2.1%) and the UAW could also reach a deal soon. Although nothing was finalized, the optimism helped solidify a risk-on mindset following today’s batch of better-than-feared earnings results.

Elsewhere, the Philadelphia Semiconductor Index (+2.2%) set a new all-time high on Tuesday. 29 of its 30 components finished higher, with NVIDIA (NVDA 196.37, +9.84, +5.3%) advancing the most after its price target was raised to $250 from $225 at Bank of America/Merrill Lynch.

CURRENCY MARKET WRAP 

As of Tue Oct 15th, Singapore Time zone UTC+8

U.S. Dollar Index, +0.02%, 98.45
USDJPY, -0.06%, $108.40
EURUSD, -0.02%, $1.1026
GBPUSD, -0.06%, $1.2609
USDCAD, +0.18%, $1.3227
AUDUSD, -0.29%, $0.6775
NZDUSD, -0.38%, $0.6304

U.S., Canadian and Japanese banks were closed on Monday.

Last week featured a torrent of headlines related to trade negotiations between officials from China and the U.S., so it wasn’t too surprising that the market remained focused on what was and wasn’t accomplished during Friday’s talks. Overnight reports in Chinese media spoke about last week’s negotiations in conservative terms, prompting worries that the signing of the “phase one” deal will remain elusive. These worries weighed on equity futures in early-morning trade, but a recovery took place after Trump and Treasury Secretary Mnuchin reiterated that the partial deal will be finalised and signed in time for the Asia-Pacific Economic Cooperation summit in Chile in mid-November.

The Monetary Authority of Singapore (MAS) is reducing the pace of the Singapore dollar’s appreciation “slightly”, in line with market expectations amid subdued growth and low inflation. MAS said it would lower slightly the slope of the Singapore dollar’s policy band, known as the nominal effective exchange rate or S$NEER, a shallower easing than some had expected (hence SGD strengthened). The width and level at which the band was centred were left unchanged. The last time MAS eased policy was in April 2016 when it was set at 0% on cloudy growth and inflation outlook.

STOCK MARKET WRAP 

S&P500, -0.14%, 2,966.15
Nasdaq, -0.10%, 8,048.65
Nikkei Futures, -0.02%, 22,087.5

The major averages began the week on a quiet note. The S&P 500 shed 0.14% after spending the day in a ten-point range. Nine out of eleven sectors settled in the red, but only three sectors—materials (-0.8%), utilities (-0.7%), and consumer staples (-0.4%)—lost more than 0.2%. On the flip side, financials (+0.1%) and real estate (+0.1%) eked out slim gains.

Bank stocks like Citigroup (C 70.24, +0.14, +0.2%), Goldman Sachs (GS 205.82, +1.14, +0.6%), JPMorgan Chase (JPM 116.45, +0.31, +0.3%), and Wells Fargo (WFC 49.27, +0.06, +0.1%) outperformed modestly leading up to the release of their Q3 results tomorrow morning.

CURRENCY MARKET WRAP 

As of Mon Oct 14th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.41%, 98.30
USDJPY, +0.42%, $108.42
EURUSD, +0.33%, $1.1042
GBPUSD, +1.66%, $1.2649
USDCAD, -0.71%, $1.3198
AUDUSD, +0.40%, $0.6789
NZDUSD, +0.30%, $0.6339

U.S. Import prices were up 0.2% m/m in September, fuel import prices were up 2.1%, and nonfuel import prices were down 0.1%. Export prices were down 0.2%, agricultural export prices were down 1.8%, and non-agricultural export prices were down 0.1%. The key takeaway from the report is that it shows a lack of inflation pressure for both import and export prices. The preliminary University of Michigan Consumer Sentiment Index for October checked in at 96.0 (consensus 89.9), up from the final reading of 93.2 for September. Real income expectations rose to their highest level in two decades. That’s a good portent for consumer spending activity.

The second day of trade talks between representatives from China and the U.S. started with considerable optimism, which President Trump made sure to highlight in a morning tweet. The first two hours of the session saw an aggressive rally that was paced by cyclical sectors, and briefly lifted the S&P 500 above its high from October 1. The benchmark index hit a session high shortly after the Federal Reserve confirmed what Fed Chairman, Jay Powell, signalled earlier this week.

Starting Tuesday, the Federal Reserve will begin purchasing Treasury bills at a pace of $60 bln per month. The purchases will continue into the second quarter of next year or longer. In addition to these purchases, the Fed will continue conducting regular overnight and term repurchase operations through at least January. The Fed noted that it is looking to return bank reserves to a level that was seen in early September. The program, which is aimed at steepening the yield curve by pressuring Treasury bill yields, was foreshadowed by the September FOMC Statement and Fed Chairman Powell’s remarks made on Monday and Tuesday.

Risk assets backed off its session high in midday trade, but received a midday boost after Bloomberg reported that a partial trade deal was reached at Friday’s meeting. The report, which made the rounds before Trump’s meeting with China’s Vice Premier Liu He, said that the deal calls for increased agricultural concessions from China in exchange for some tariff relief. Trump later said that a “very substantial phase 1 deal” has been reached that covers intellectual property, financial services, and agricultural purchases.

STOCK MARKET WRAP 

S&P500, +1.09%, 2,970.27
Nasdaq, +1.34%, 8,057.04
Nikkei Futures, +1.30%, 21,800.0

The major averages ended a bumpy week on a higher note. The S&P 500 gained 1.1% to end the week higher by 0.6% while the Nasdaq (+1.3%) outperformed, rising 0.9% for the week. Small caps had an even better showing today as the Russell 2000 rose 1.8%, climbing 0.8% for the week.

Even with the weak finish, eight sectors recorded gains. Cyclical sectors held the lead throughout the day with industrials (+2.0%), materials (+1.9%), technology (+1.5%), energy (+1.4%), and financials (+1.3%) ending ahead of the broader market. Conversely, rate-sensitive utilities (-0.4%), real estate (-0.3%), and consumer staples (-0.1%) underperformed as Treasury yields rose amid the improvement in risk tolerance.

CURRENCY MARKET WRAP 

As of Fri Oct 11th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.43%, 98.69
USDJPY, +0.37%, $107.86
EURUSD, +0.35%, $1.1009
GBPUSD, +1.85%, $1.2432
USDCAD, -0.33%, $1.3289
AUDUSD, +0.58%, $0.6764
NZDUSD, +0.52%, $0.6326

U.S. Total CPI was unchanged m/m in September (consensus +0.1%) while core CPI, which excludes food and energy, was up 0.1% (consensus +0.2%).

In trade, Trump on Thursday hinted at progress in his high-stakes trade battle with China, saying talks with Beijing’s envoy had gone well. The new signs of comity were an abrupt improvement after a week in which Washington blitzed Beijing with aggressive policy measures and talks appeared headed for a dead end, just days before US duties on US$250 billion in Chinese imports are due to rise. Risk assets were bid, with investors buoyed by hopes that at least escalation might be averted even if an overarching resolution was beyond reach. Myron Brilliant, head of international affairs at the US Chamber of Commerce, told reporters on Thursday he had spoken with both sides and that an agreement on currency could emerge this week.

The 2-yr yield (1.53%) and the 10-yr yield (1.66%), which both rose seven basis points, initially started to sell off after yr/yr changes in consumer prices reflected a firming of consumer inflation. The U.S. Dollar Index fell 0.4% to 98.69. WTI crude rose 1.8% (+$0.94) to $53.57/bbl.

STOCK MARKET WRAP 

S&P500, +0.64%, 2,938.13
Nasdaq, +0.60%, 7,950.78
Nikkei Futures, +1.20%, 21,697.5

Wall Street ended Thursday on a positive note, as investors looked ahead to a supposed meeting between Trump and China’s Vice Premier, Liu He, today. A tweet from Trump in which he said he will meet with the Vice Premier at the White House on Friday quickly sent stocks higher and U.S. Treasuries even lower. Ten of the 11 S&P 500 sectors finished in positive territory, with the energy (+1.3%) and financial (+1.0%) sectors advancing the most. The utilities sector (-0.1%) was the lone holdout amid the higher Treasury yields.

Notable large-cap movers included Cisco Systems (CSCO 46.15, -0.69, -1.5%), Netflix (NFLX 280.48, +12.95, +4.8%), and Delta Air Lines (DAL 53.10, -0.82, -1.5%). Cisco was downgraded to Neutral from Buy at Goldman Sachs. Netflix brushed off two more analyst price cuts. Delta Air Lines guided Q4 EPS with a midpoint that was below expectations.

Outsized moves belonged to Bed Bath & Beyond (BBBY 12.09, +2.15, +21.6%) and PG&E (PCG 7.79, -3.19, -29.1%). Bed Bath & Beyond appointed former Target (TGT 110.57, +0.21, +0.2%) executive Mark Tritton as its President and CEO. In PG&E’s case, a bankruptcy judge decided to allow other parties to put forth a Chapter 11 restructuring plan for the company.