CURRENCY MARKET WRAP 

As of Fri Aug 16th, Singapore Time zone UTC+8

Dollar Index +0.15%, 98.14  
USDJPY, +0.17%, $106.10
EURUSD, -0.26%, $1.1111
GBPUSD, +0.24%, $1.2091
USDCAD, +0.02%, $1.3318
AUDUSD, +0.36%, $0.6773
NZDUSD, -0.03%, $0.6434

In trade, China announced Thursday that it would be forced to take “necessary countermeasures” if Trump moves forward with tariffs set to take effect Sept. 1, continuing the back-and-forth escalation of the trade war even as the conflict elevates fears of a global economic slowdown. Chinese officials offered no further details as to what form countermeasures might take, or whether their trade negotiators would still be coming to the U.S. to continue talks in September. But the message shows China is prepared to dig its heels in, even as it grapples with political protests in Hong Kong and a raft of disappointing economic data.

U.S. economic data, meanwhile, helped placate some growth concerns. Retail Sales for July, showed an increase of 0.7% m/m last month (consensus 0.3%). The data coincided with upbeat results and guidance from Walmart (WMT 112.69, +6.49, +6.1%), which corroborated the view that the U.S. consumer could be the key to ward off a recession.

The U.S. Treasury market, meanwhile, continued to draw in buyers. Yields took a sharp leg lower during the day following some central bank news: (1) The Wall Street Journal reported that the European Central Bank is preparing a “very strong package” of stimulus measures to boost the eurozone economy and (2) the Mexican Central Bank lowered its key lending rate for the first time in over five years (-25bps to 8%). The 2-yr yield finished nine basis points lower at 1.49%, and the 10-yr yield finished five basis points lower at 1.53%. The 30-yr yield fell below 2.00%, finishing five basis points lower at 1.98%. The U.S. Dollar Index increased 0.1% to 98.10.

STOCK MARKET WRAP 

S&P500, +0.25%, 2,847.60
Nasdaq, -0.09%, 7,766.62
Nikkei Futures, -1.37%, 20,298.0

Stock market finished mixed on Thursday, as investors weighed the resiliency of the U.S. consumer against familiar growth concerns. The S&P 500 (+0.3%) and Dow Jones Industrial Average (+0.4%) finished higher, while the Nasdaq Composite (-0.1%) and Russell 2000 (-0.4%) finished lower.

Yesterday’s laggards included the S&P 500 cyclical sectors. The energy sector (-0.5%) fell alongside oil prices ($54.38/bbl, -$0.77, -1.4%). The industrials sector (-0.2%) was subject to a 11.3% drop in shares of General Electric (GE 8.01, -1.02)after it was accused of accounting fraud. Information technology (-0.2%) was weighed down by disappointing guidance from Cisco Systems (CSCO 46.25, -4.36, -8.6%).

CURRENCY MARKET WRAP 

As of Thu Aug 15th, Singapore Time zone UTC+8

Dollar Index +0.16%, 97.96  
USDJPY, -0.78%, $105.92
EURUSD, -0.25%, $1.1143
GBPUSD, -0.01%, $1.2059
USDCAD, +0.67%, $1.3312
AUDUSD, -0.68%, $0.6755
NZDUSD, -0.29%, $0.6439

Economic data from two of the world’s biggest economies added to investors’ fears on Wednesday. European markets fell after Germany’s economy contracted 0.1% in the spring due to the global trade war and troubles in the auto industry. In China, the world’s second-largest economy, growth in factory output (4.8% vs 6.0% Exp.), retail spending (7.6% vs 8.6% Exp.) and investment (5.7% vs 5.9% Exp.) weakened in July.

The 2-yr yield fell nine basis points to 1.58%, and the 10-yr yield fell ten basis points to 1.58%. Interestingly, the 30-yr yield hit a record low at 2.02% before finishing the session down 11 basis points at 2.03%. The U.S. Dollar Index held firm, advancing 0.16% to 97.96. It should be noted that the 2s-10s yield spread did not remain inverted during the session.

STOCK MARKET WRAP 

S&P500, -2.93%, 2,926.32
Nasdaq, -3.02%, 7,773.94
Nikkei Futures, -0.67%, 20,213.0

Each of the major U.S. indices lost around 3.0% on Wednesday, as weak global data and a recessionary signal in the U.S. Treasury market sent stocks reeling. Broad-based selling left both S&P 500 and Russell 2000 down 2.93%. The Dow Jones Industrial Average lost 3.1%, and the Nasdaq Composite lost 3.02%.

The stock market began the day sharply lower, giving back a bulk of yesterday’s advance, after data out of China and Germany continued to weaken. China reported its slowest industrial production growth since 2002, and Germany reported a 0.1% qtr/qtr decline in Q2 GDP. Understandably, investors rushed to safe-haven assets such as gold ($1527.80, +$13.70, +0.9%) and U.S. Treasuries, while equities steadily declined throughout the day. The yield-curve flattening impacted shares of Citigroup (C 61.41, -3.42, -5.3%), Bank of America (BAC 26.42, -1.30, -4.7%), and JPMorgan Chase (JPM 104.80, -4.54, -4.2%).

CURRENCY MARKET WRAP 

As of Wed Aug 14th, Singapore Time zone UTC+8

Dollar Index +0.41%, 97.78  
USDJPY, +1.23%, $106.61
EURUSD, -0.33%, $1.1177
GBPUSD, -0.09%, $1.2064
USDCAD, -0.19%, $1.3214
AUDUSD, +0.64%, $0.6797
NZDUSD, +0.20%, $0.6461

In trade, the White House announced that it will delay the 10% tariff rate for some items imported from China, including cell phones and laptops, until Dec. 15. Originally, the 10% tariff rate on $300 billion of mostly consumer goods was set to go into effect Sept. 1.Most products will still be taxed on that date, but the decision to delay some big-ticket items followed a “public comment and hearing process,” according to the USTR. Other items will be also removed from the tariff list based on “health, safety, and national security” factors. Trump told reporters he wanted to delay the tariffs so consumers would not be hurt during the Christmas shopping season and said he had a very productive call with China. On a related note, China’s Ministry of Commerce indicated that trade talks will resume over the phone within the next two weeks.

Although structural trade issues remain, the news did serve as a temporary relief to the market that had been grappling with geopolitical uncertainty, growth concerns, weakness in global equities, and declining U.S. Treasury yields.

Shorter-dated U.S. Treasuries sold off, driving yields higher in another curve-flattening trade. The 2-yr yield increased nine basis points to 1.67%, and the 10-yr yield increased four basis points to 1.68%. The general risk-on mood helped the market overlook the continued compression in yields. The U.S. Dollar Index advanced 0.41% to 97.78.

STOCK MARKET WRAP 

S&P500, +1.48%, 2,926.32
Nasdaq, +1.95%, 8,016.36
Nikkei Futures, +1.50%, 20,373.0

U.S. stocks rallied on Tuesday after the White House announced that it will delay the 10% tariff rate. Apple (AAPL 208.97, +8.49, +4.2%)led the broad-based advance and contributed to the solid gains in the S&P 500 (+1.48%), Dow Jones Industrial Average (+1.4%), and Nasdaq Composite (+1.95%). The Russell 2000 increased 1.1%.

In turn, the upbeat news contributed to gains in all 11 S&P 500 sectors and a 4% rally in oil prices ($57.04/bbl, +$2.23, +4.1%). Nine sectors advanced at least 1.0%, led by the information technology (+2.5%), consumer discretionary (+1.7%), and communication services (+1.5%) sectors. The Philadelphia Semiconductor Index climbed 3.0%.

CURRENCY MARKET WRAP 

As of Tue Aug 13th, Singapore Time zone UTC+8

Dollar Index +0.01%, 97.50  
USDJPY, -0.01%, $105.38
EURUSD, +0.08%, $1.1216
GBPUSD, +0.49%, $1.2078
USDCAD, +0.14%, $1.3237
AUDUSD, -0.33%, $0.6755
NZDUSD, -0.21%, $0.6447

Argentina’s bonds collapsed on Monday following a “shocking” landslide loss for President Mauricio Macri in a primary election. The Kirchner-allied Alberto Fernandez garnered nearly 48% of the vote to Macri’s 32%, a result that bodes ill for the president’s chances in October. If the same result plays out, there won’t even be a runoff. 45% of the vote (or 40% and a margin of 10 points), wins the presidency outright. The Argentina ETF is in full-on meltdown mode, falling nearly 30%.

U.S. corporate and economic print was sparse on Monday, which helped turn attention to the government protests in Hong Kong, the political instability in Italy and Argentina, and the lack of improvement in U.S.-China trade relations. Economists from Goldman Sachs added to the sour mood, stating that they are not expecting a U.S.-China trade deal before the 2020 presidential election.

The spread between the 2-yr and 10-yr yields narrowed to six basis points, as demand for longer-dated tenors continued to climb amid growth concerns. The 2-yr yield fell five basis points to 1.58%, and the 10-yr yield fell ten basis points to 1.64%. Analysts are rushing to adjust their forecasts. UBS cut their year-end target for 10-year yields to just 1.25%, and Morgan Stanley trimmed their outlook as well. Yields are down some 40bps this month alone. The U.S. Dollar Index unchanged at 97.50.

STOCK MARKET WRAP 

S&P500, -1.22%, 2,883.09
Nasdaq, -1.20%, 7,863.41
Nikkei Futures, -0.12%, 20,373.0

Stock market fell more than 1% on Monday, as uncertainties about the global economy continued to push investors away from risk assets and into safe-haven assets like U.S. Treasuries and gold. The S&P 500 fell 1.22%, which was comparable to the declines in the Nasdaq Composite (-1.2%) and Russell 2000 (-1.2%). The Dow Jones Industrial Average lost 1.5%.

This compression in yields not only hit investor sentiment but was also affected the S&P 500 financials sector (-1.9%), which led all 11 S&P 500 sectors in losses. Banks typically rely on healthy net interest margins to boost profit and facilitate lending activity. The other rate-sensitive sectors — real estate (-0.3%) and utilities (-0.3%) — outperformed but still finished lower.

CURRENCY MARKET WRAP 

As of Thu Aug 8th, Singapore Time zone UTC+8

Dollar Index -0.02%, 97.61
USDJPY, -0.35%, $106.11
EURUSD, +0.04%, $1.1204
GBPUSD, -0.23%, $1.2141
USDCAD, +0.26%, $1.3314
AUDUSD, -0.05%, $0.6758
NZDUSD, -1.16%, $0.6449

Treasury yields have been on a steady decline since November, but a sharp acceleration that further flattened the yield curve yesterday was startling to see. Investors piled into the safe-haven asset amid familiar growth concerns and expectations that global central banks will continue to lower rates.

Central banks from New Zealand (50bps vs Expected 25bps), India (35bps vs Expected 25bps), and Thailand (25bps vs Expectation Of No Cut) cut interest rates sharper than expected on Wednesday with New Zealand’s RBNZ Governor indicating that rates may go negative. Negative rates around the world has been a phenomenon that has presumably increased interest in U.S. Treasuries.

The 2-yr yield finished three basis points lower at 1.58% after touching 1.53% at its low, and the 10-yr yield finished six basis points lower at 1.68% after touching 1.61% at its low. The U.S. Dollar Index finished flat at 97.61. Low rates and growth concerns continued to boost gold ($1505.9/oz, +$33.30, +2.3%), which at one point today provided investors a higher return than the S&P 500 this year.

STOCK MARKET WRAP 

S&P500, +0.08%, 2,883.98
Nasdaq, +0.38%, 7,862.83
Nikkei Futures, -0.06%, 20,518.0

Stock market staged a big reversal on Wednesday in which the S&P 500 increased 0.08% after being down as much as 2.0% shortly after the open. A steep drop in U.S. Treasury yields contributed to the early sell-off, but selling pressure was abated soon after yields stabilized. The Nasdaq Composite (+0.38%) also finished higher after beginning sharply lower, while the Dow Jones Industrial Average (-0.1%) and Russell 2000 (-0.1%) finished just below their flat lines.

Nevertheless, much like Tuesday’s session, initial gloom and doom quickly turned into an opportunistic mindset throughout the day. Six of the 11 S&P 500 sectors finished in the green, led by solid gains in the materials (+1.3%), consumer staples (+1.2%), and real estate (+0.9%) sectors.

In earnings news, Dow component Walt Disney (DIS 134.86, -7.01, -4.9%)fell nearly 5% after it missed top and bottom-line estimates.CVS Health (CVS 58.12, +4.03, +7.5%)and Match Group (MTCH 91.77, +17.86, +24.2%)climbed on positive results and guidance.

CURRENCY MARKET WRAP 

As of Wed Aug 7th, Singapore Time zone UTC+8

Dollar Index +0.05%, 97.56
USDJPY, +0.35%, $106.32
EURUSD, +0.03%, $1.1205
GBPUSD, +0.23%, $1.2170
USDCAD, +0.50%, $1.3282
AUDUSD, +0.07%, $0.6762
NZDUSD, +0.05%, $0.6531

The People’s Bank of China set the daily currency fixing stronger than analysts expected and announced the planned sale of yuan-denominated bonds in Hong Kong. The moves, which came hours after the U.S. labeled the country a currency manipulator, helped drive the offshore Yuan higher. China’s central bank will sell 30 billion yuan ($4.2 billion) of bills in Hong Kong on Aug. 14, according to a PBOC statement Tuesday. The move typically drains liquidity offshore, making it more costly to short the Chinese currency. 

This helped subside some of yesterday’s currency-related angst and contribute to a more risk-on mindset throughout the day.

While equities rallied, the U.S. Treasury yield curve continued to flatten, which reflected ongoing concerns about the economic outlook. The 2-yr yield increased three basis points to 1.61%, and the 10-yr yield finished flat at 1.74%. The U.S. Dollar Index increased 0.05% to 97.56.

STOCK MARKET WRAP 

S&P500, +1.30%, 2,881.77
Nasdaq, +1.39%, 7,833.27
Nikkei Futures, -0.33%, 20,522.5

U.S. stocks rebounded from their worst day of the year on Tuesday, as investors appeared comfortable in buying the dip after China took steps to stabilise its currency. The major indices closed near session highs with the S&P 500 advancing 1.3%. The Dow Jones Industrial Average increased 1.2%, the Nasdaq Composite increased 1.39%, and the Russell 2000 increased 1.0%.

Nine of the 11 S&P 500 sectors finished higher by at least 1.0%. The information technology (+1.6%), financials (+1.5%), and industrials (+1.5%) sectors led the advance, while the energy sector (-0.1%) was the lone holdout as oil prices ($53.84/bbl, -$0.80, -1.5%) continued to decline.

Take-Two Interactive (TTWO 124.56, +9.18, +8.0%), KLA Corporation (KLAC 135.64, +9.18, +7.3%), and Zoetis (ZTS 121.17, +8.60, +7.6%)were some of today’s biggest gainers following upbeat results and/or guidance. Chemicals company Mosaic (MOS 22.02, -1.58, -6.7%) fell nearly 7% after providing disappointing results and guidance. In other corporate news,DuPont (DD 68.53, +2.47, +3.7%) outperformed following a Bloomberg report indicating that the company is considering selling its biosciences unit, which could sell for $20 billion.

CURRENCY MARKET WRAP 

As of Tue Aug 6th, Singapore Time zone UTC+8

Dollar Index -0.89%, 97.22  
USDJPY, -0.91%, $105.61
EURUSD, +1.20%, $1.1243
GBPUSD, +0.01%, $1.2157
USDCAD, +0.06%, $1.3214
AUDUSD, -0.55%, $0.6762
NZDUSD, +0.22%, $0.6557

Monday’s session began noticeably lower after China allowed the RMB to weaken beyond 7 per U.S. dollar in response to Trump’s tariff threat.Global equities declined sharply, and the selling carried over into U.S. equities, which steadily declined throughout the session.

Trump expressed his discontent on the “currency manipulation,” while the People’s Bank of China Governor, Yi Gang, said the central bank will not engage in competitive devaluation. China also said its companies agreed to suspend new agricultural purchases from the U.S.

Following the plunge in the yuan overnight, The U.S. Treasury Department on Monday designated China as currency manipulator, a historic move that no White House had exercised since the Clinton administration. “Secretary Mnuchin, under the auspices of President Trump, has today determined that China is a Currency Manipulator,” the Treasury Department said in a release. As a result of this determination, Secretary Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions.

The implied likelihood for a 50-basis points rate cut at the September FOMC meeting climbed to 23.5% versus 1.5% on Friday, according to the CME FedWatch Tool. Expectations for the Fed to step up its easing efforts amid increased risks to the economic outlook expounded the flight-to-safety in U.S. Treasuries. On a related note, all of Germany’s sovereign debt yielded negative rates for the first time on Monday.(Germany Bund 2 Year Yield, -0.82%, 5 Year Yield, -0.76%, 10 Year Yield, -0.52%, 30 Year Yield, -0.01%)

The U.S. 2-yr yield dropped 13 basis points to 1.58%, and the U.S. 10-yr yield dropped 12 basis points to 1.74%. The U.S. Dollar Index fell 0.89% to 97.22. WTI crude lost 2.0% to $54.64/bbl. Separately, gold futures settled 1.2% higher at $1467.20/oz, further helped by weakness in the dollar and declining U.S. Treasury yields.

STOCK MARKET WRAP 

S&P500, -2.98%, 2,844.74
Nasdaq, -3.47%, 7,726.04
Nikkei Futures, -4.12%, 20,023.0

Stock market had its worst day of 2019 with each of the major U.S. indices losing around 3% on Monday. Trade and growth concerns rattled capital markets after China devalued the yuan to its weakest level against the dollar since 2008. The Dow Jones Industrial Average fell 2.9%, the Nasdaq Composite fell 3.47%, and the Russell 2000 fell 3.0%.

It was clearly risk-off on Wall Street with all 11 S&P 500 sectors finishing with steep losses. Eight sectors finished with losses between 2.3% (health care) and 4.1% (information technology). The tech sector was pressured by shares of Apple (AAPL 193.34, -10.68, -5.2%)and semiconductor companies, many of which derive a large portion of their revenue from China. The Philadelphia Semiconductor Index dropped 4.4%.