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Hot Brendan Keenan's "Bleak Omens" for Europe!

Discussion in 'Europe' started by Dublin 4, Jan 17, 2018 at 8:01 AM.

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Are you glad that this Economics Thread is the Biggest Thread of all on P.irish?

  1. Yes.

    60.9%
  2. No.

    39.1%
  1. mikeo

    mikeo Member Political Irish

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    Fuckin sickening!!!!!!!!!!!!!!

    Bring back some Dan Breen types !! These Sons of bitches have to go!!!
     
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  2. mikeo

    mikeo Member Political Irish

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    GOOD!! Let the whole fuckin thing collapse!!!
     
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  3. Tadhg Gaelach

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    WEDNESDAY, JANUARY 10, 2018
    TOP NEWS

    China's factory inflation slowest in 13 months as war on pollution steps up
    China's producer prices rose at their slowest pace in 13 months in December, as the government's war against winter smog dented factory demand for raw materials in a sign the world's second largest economy has started to slow. The PPI rose 4.9 percent in December from a year earlier, the slowest growth since November 2016, the National Bureau of Statistics said. That was slightly faster than the 4.8 percent in a Reuters poll of analyst but much weaker than the 5.8 percent pace seen in November. The data also showed consumer inflation accelerating less than expected and remaining well within the central bank's comfort zone. Analysts say the year-on-year slowdown in producer price inflation was due in part to a high base last year with price gains in raw materials falling from their peaks. It also supports the view that a softening in the economy has started in the last few months.

    UK economy set for "underwhelming" 2018, says British Chambers of Commerce
    Britain's economy looks set for an underwhelming 2018, according to a major survey that showed businesses are in a subdued mood ahead of Brexit. Companies continued to grapple with cost pressures in the last three months of 2017 and were reluctant to invest more, the British Chambers of Commerce's (BCC) Quarterly Economic Survey showed. The services sector, which represents the lion's share of Britain's economy, continued to expand at a subdued pace, the BCC said. Manufacturers did better than services firms, but still reported a slowdown in both domestic and export sales. Overall the survey suggested the economy grew modestly at the end of last year, after picking up slightly in the three months to September with quarterly growth of 0.4 percent - below a historic trend of nearer 0.6 percent. "The economy is set to continue on an underwhelming growth trajectory over the near term with uncertainty over the impact of Brexit coupled with high inflation and weak productivity likely to dampen overall economic activity," the BCC's head of economics, Suren Thiru, said.

    Australia job vacancies climb to record in Nov qtr
    Job vacancies in Australia climbed to their highest on record in the three months to November, a sixth straight quarter of solid gains that augured well for continued growth in hiring. Total job vacancies rose 2.7 percent to 210,300 seasonally adjusted in the Sept-Nov quarter, from 204,800 in the previous quarter, data from the Australian Bureau of Statistics showed. That was the highest reading since the series began in 1979 and left vacancies a healthy 16 percent higher than a year earlier. Vacancies in the private sector climbed 3.8 percent to 192,000, again the highest on record. That was up 17.3 percent on the previous year. In contrast, public sector vacancies fell back 7.6 percent in the November quarter to 18,300. Analysts value the vacancies series as it has proved a reliable leading indicator of labour demand and turning points in employment growth. The strength in vacancies supports official figures for employment which showed a surge in hiring last year, driving the jobless rate down to 5.4 percent.


    U.S. job openings, layoffs fall to six-month lows in November
    U.S. job openings fell for a second straight month in November, with declines in the manufacturing and real estate sectors, supporting economist forecasts that job growth will slow in 2018. The monthly Job Openings and Labor Turnover Survey, or JOLTS, released by the Labor Department on Tuesday, also found that layoffs dropped to a six-month low, however, showing continued labor market strength. Job openings, a measure of labor demand, fell by 46,000 to a seasonally adjusted 5.88 million, the lowest level since May. The job openings rate was 3.8 percent, a decline from October's 3.9 percent. Hiring dropped 104,000 to 5.49 million in November, and the hiring rate dipped to 3.7 percent from 3.8 percent. Economists expect job growth this year to slow to well below the 2017 monthly average of 170,000 as the labor market hits full employment.

    Fed's Kashkari: Keep interest rates low to boost wages, inflation
    The U.S. Federal Reserve should keep interest rates low so that wage gains accelerate and inflation rises, Minneapolis Federal Reserve President Neel Kashkari said on Tuesday. "Inflation has been low, wage growth has been low, so I'm advocating for lower interest rates to get wages up and to get inflation back to our 2 percent target," Kashkari said at an event in Minnesota. Kashkari has repeatedly said he wants to see inflation rise before increasing interest rates any further. Kashkari does not have a vote on the Fed's rate-setting committee this year, but did have in 2017 during which he dissented against the central bank's decision to raise borrowing costs three times.



    CHART OF THE DAY
    The Dollar and U.S./Germany 10-year yield spreads

    [​IMG]


    COLUMN
    Policy tightening? It's real rates that matter for markets

    U.S. and UK interest rates are rising, the European Central Bank is cutting back its bond purchases and even the Bank of Japan is hinting it will turn off the stimulus taps one day. With rates rising and central banks no longer expanding their balance sheets, monetary policy around the world will tighten more in 2018 than any year since the crisis. Yet the real cost of borrowing, taking inflation into account, remains low historically and perhaps dangerously low. Real interest rates across the developed world have been negative since October 2016, and look set to remain so for some time.


    MORNING MEETING


    JGBs follow UST selloff

    BONDS, EQUITIES, OTHER ASSET MARKETS
    • US Treasury 10s indicated 2.552%, JGB 10s 0.079%, Bund 10s 0.470%.
    • US-Japan-Germany respective 2s indicated 1.966%, -0.128%, -0.655%.
    • JGBs off after UST selloff overnight.
    • 10yr auction results as eyed, but not good enough for market to recover.
    • LCH/JSCC basis keeps widening, foreign swap paying suspected.
    • Talk of one foreign account switching swap paying to 10yr cash selling.
    • Foreigners apparently see yesterday's BoJ JGB move as tapering.
    • Domestics see BoJ move as fine-tuning.
    • 10yr auction stops at 0.079%, vs 0.064% last.
    • BTC 3.74, tail 0.1bp, 3.70/0.5bp last.
    • At 150.39, JGB futures off 24 ticks on day, range 150.49/150.38.
    • Nikkei in 23,755-864 range, 24k still seen heavy.
    • At 23,816, index off 33 points on day.
    • AXJ mixed - SSEC up 0.35% and HSI up 0.7%.
    • KOSPI -0.2%, STI -0.1%, TWI -0.7%, ASX -0.5%, NZX50 -0.8%.

    Currency Summaries
    JPY
    • USD/JPY and JPY crosses on back-foot as JPY buy-backs continue.
    • Gotobi demand at Tokyo fix not so large, left pair open to more downside.
    • USD/JPY 112.78 early high to 112.17, below 112.38 daily Ichi cloud base.
    • Ascending 100-DMA at 112.21 also pierced on continuing long liquidation.
    • Option expiries at 112.25-30 (USD560) mln, 40-50 (643) slowed descent.
    • More expirations today to help cap - 112.75-80 480 mln, 113.00 1.2 bln.
    • Techs weak but Japanese bidding interest still trails down.
    • EUR/JPY bounce from NY 134.05 low to 134.57 early Asia, then off to 133.97.
    • Cross heading for 133.30 55-DMA? 131-134.50 September-December range?
    • GBP/JPY bounce early to 152.59 before fresh weakness to 151.77.
    • AUD/JPY 88.17 early high to 87.67, NZD/JPY 80.69 to 80.25 before bounce.
    • AUD/JPY and NZD/JPY possibly at beginning of reversal, too soon to tell.
    • Japanese demand outstrips supply by largest margin in 9+ years - Nikkei

    EUR
    • EUR/USD opened 0.25% lower at 1.1937 after USD & JPY broadly strengthened
    • It dipped to 1.1928 on EUR/JPY selling as cross eased 0.35% to 133.97
    • EUR/USD buyers returned after the EUR/JPY selling subsided
    • EUR/USD was trading around 1.1945 heading into the afternoon session
    • Support is found at the 21-day MA at 1.1913 & 50% of 1.1717/1.2092 at 1.1905
    • Resistance at the 10-day MA at 1.1997 and break would sift pressure to upside
    • No data out of Europe so key will be DE/US yield spreads

    GBP
    • Cable again does little in Asia, range 1.3526-42, quiet.
    • Daily chart shows uptrend barely surviving, to falter?
    • GBP342 mln 1.3530-35 option expiries today magnet of sorts.
    • More below between 1.3495-1.3515, total GBP875 mln.
    • Support from area of ascending 200-HMA currently at 1.3528.
    • EUR/GBP soggy but quiet, Asia 0.8815-24, around 0.8822 200-DMA.
    • Option expiries supportive, E554 mln between 0.8790-0.8800.

    CHF
    • USD/CHF steady after push up yesterday, Asia 0.9828-42.
    • 0.9842-49 daily Ichi cloud helps cap, cloud thin and ascending.
    • EUR/CHF 1.1732-47 in Asia, buoyant, 1.1666 55-DMA support below.

    Market Briefs
    • China's producer price inflation slows to 13-month low at 4.9%
    • China Dec CPI rises 1.8% y/y
    • UK economy set for "underwhelming" 2018: British Chambers of Commerce
    • Australia job vacancies climb to record in Nov qtr
    • S.Korea's Moon says Trump deserves 'big' credit for North Korea talks
    • Toyota, Mazda to build $1.6 bln plant in Alabama

    Looking Ahead - Economic Data (GMT)
    • 07:45 FR Nov Industrial Output MM, f'cast -0.5%, 1.9% last
    • 09:30 GB Nov Industrial Output MM, f'cast 0.3%, 0.0% last
    • 09:30 GB Nov Industrial Output YY, f'cast 1.8%, 3.6% last
    • 09:30 GB Nov Manufacturing Output MM, f'cast 0.3%, 0.1% last
    • 09:30 GB Nov Manufacturing Output YY, f'cast 2.8%, 3.9% last
    • 09:30 GB Nov Goods Trade Balance GBP, f'cast -10.70 bln, -10.79 bln last
    • 09:30 GB Nov Construction O/P Vol YY, f'cast -1.1%, -0.2% last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • 14:00 Federal Reserve Bank of Chicago President Charles Evans participates in moderated discussion on current economic conditions and monetary policy before the Lake Forest-Lake Bluff Rotary Club 2018 Economic Breakfast in Lake Forest, Illinois
    • 14:10 Federal Reserve Bank of Dallas President Robert Kaplan participates in moderated discussion on Weitzman Annual Retail Forecast in Dallas
    • 15:00 Bank of England Deputy Governor Ben Broadbent appears on BBC Radio 4's Money Box Live to answer questions on central bank policy in London
    • 15:15 Fed's Kaplan participates in moderated discussion at the Urban Land Institute Emerging Trends Breakfast in Dallas
    • 18:30 Federal Reserve Bank of St. Louis President James Bullard gives presentation on the U.S. economy and monetary policy, in St. Louis
    See North American Open for a detailed listing of US/NorAm releases, events

    Asia cbanks' aversion to extended USD drop on display
    The Chinese central bank's move to neutralise the so-called counter-cyclical factor Tuesday and the Bank of Korea's aggressive dollar-buying intervention Monday clearly indicate that Asian central banks will not remain silent spectators in the US dollar's near one-way decline in the final quarter of 2017. With most Asian central banks closer to a tightening cycle and the USD's marked inability to rally despite many positives such as the jump in UST yields, the risk of an accelerated USD decline has been curbed for now. The PBOC appears to have an unofficial lower limit of 6.4350-6.4500 for USD/CNY - forays towards this area met with liberalisation moves on Sept 9, verbal intervention Monday and the tweak to the fixing mechanism yesterday. This should also put a base under USD/AXJ pairs in general, with a bigger dollar correction to the declines of the last three months now set in motion.
    Chart:
    http://fingfx.thomsonreuters.com/gfx/buzzifr/8/1746/1741/Pasted Image.jpg

    PBOC change another factor weighing against AUD/USD
    The AUD/USD's short-term uptrend has run into a number of headwinds. Having benefited from a broadly weaker USD, rising commodity prices, heightened investor risk appetite, low volatility and rising EM currencies/equities, the trend higher is now showing signs of exhaustion, with lower daily highs in the last three trading sessions and a close below the 10-day MA for the first time in a month. The AUD/USD has stalled due to USD short-covering, stalling metal prices and AUD/JPY carry trade unwinding after the BOJ cut the volume of long-term JGB purchases. The PBOC's removal of the "counter cyclical factor" from the daily fix calculations sent the USD/CNY higher and helped put a base under USD/AXJ currencies after strong moves lower. There is now a greater chance Asian central banks, such as the Bank of Korea, will be more aggressive in intervening against any currency strength so as to remain trade competitive with China. Further weakening in AXJ currencies is likely to weigh on the AUD/USD. If the AUD/USD breaks below the 38.2 Fibo of the 0.7501-0.7875 move at 0.7732, it would confirm a short-term top is in place and more downside likely.
    Chart: http://fingfx.thomsonreuters.com/gfx/buzzifr/8/1765/1760/Pasted Image.jpgs
     
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  4. Tadhg Gaelach

    Tadhg Gaelach Legend Donator Battle Royale Political Irish

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    Breakingviews - German workers may frustrate ECB’s inflation hopes



    IG Metall is asking for a 6 percent pay rise that will affect nearly 4 million German industrial workers, some of whom went on strike on Monday and Tuesday. The union typically secures about half of what it asks for, according to JPMorgan analysis, but might have expected to do better this year, given a booming economy. The national unemployment rate is 3.6 percent, the lowest on record. More than a fifth of manufacturing firms say output is being hampered by labour shortages, according to the Bundesbank’s December monthly report.

    But higher pay is not the only thing IG Metall wants. The union is demanding more working time flexibility and wants employees to be able to cut their hours by a fifth, to 28, for two years while retaining a right to return to full-time work. It also wants shift workers or those caring for older people or children to receive some compensation if they choose reduced hours. Employers have so far rejected these demands. They may only countenance any flexibility if the union cedes more ground on wages. That’s unhelpful for the ECB, which has been buying bonds and slashed its deposit rate below zero to get inflation back to its near-2 percent goal, from 1.4 percent in December.

    German workers may not be much more helpful in future. They already work the least number of hours a year of any in Organisation for Economic Co-operation and Development countries, and 12 percent fewer hours than they did in 1991, the year after reunification. Further reductions in working time, a shortage of skilled labour and even modest rises in wages may force German industrial companies to move more jobs overseas. That would erode workers’ bargaining power – and their ability to help the ECB to generate inflation.

    Breakingviews - German workers may frustrate ECB’s inflation hopes
     
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    Dublin 4

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  7. Tadhg Gaelach

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    Very true, but let's not forget that it was the Capitalist EU that destroyed Greece and handed it over to Anarchism.
     
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    Dublin 4

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    Old age pensioners to enjoy life under Berlusconi


    More bad news for the EU Crimebank, as Italian parties pledge to undo slashes in pension benefits for Italian workers.

    Silvio Berlusconi’s Forza Italia, the anti-immigration Northern League and the far-right Brothers of Italy party sealed on Sunday an alliance ahead of a national election in March. First on the agenda for the group – likely to lead the next government – is a redrafting of the Fornero Law, a drastic reform to Italy’s costly pension system brokered by Premier Mario Monti in 2011 at the peak of the country’s sovereign debt crisis.

    The law stabilised Italy’s pension costs, but is deeply unpopular. It hiked the retirement age by linking it to life expectancy, and accelerated a transition to a system based on past contributions instead of earnings. But it also left hundreds of thousands of older citizens without jobs in limbo. The current centre-left government has tried to introduce stop-gap early retirement schemes, some based on citizens drawing on pensions early through bank loans. The Northern League wants to make early retirement more readily available and funded by the state.

    Italy’s pension U-turn would try markets’ patience
     
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  13. Tadhg Gaelach

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    THURSDAY, JANUARY 11, 2018
    TOP NEWS

    Report on China slowing US bond purchases may be "fake" - regulator
    A report that China is considering slowing or halting purchases of U.S. Treasury bonds may be based on erroneous information and could be "fake", the country's foreign exchange regulator said. Bloomberg News reported on Wednesday that Chinese officials reviewing the country's vast foreign exchange holdings had recommended slowing or halting purchases of U.S. Treasury bonds amid a less attractive market for them and rising U.S.-China trade tensions. The report sent U.S. Treasury yields to 10-month highs and sent the dollar lower. "The news could quote the wrong source of information, or may be fake news," the State Administration of Foreign Exchange (SAFE) said in a statement published on its website. China has been diversifying its foreign currency reserves investments to help "safeguard the overall safety of foreign exchange assets and preserve and increase their value", the SAFE said.

    Japan's central bank maintains bond purchases after earlier jolt, JGBs bounce
    The Bank of Japan maintained the amount of its bond purchases, helping to soothe a market rattled earlier this week by a cut in its buying of longer-dated debt that fanned worries the central bank may be moving to turn off its stimulus. The BOJ maintained the size of its buying in one- to three-, three- to five-, and five- to ten-year Japanese government bonds at 250 billion yen, 300 billion yen and 410 billion yen respectively. Most market players expected the BOJ to avoid causing another shock in the market, especially after U.S. bond markets were shaken by a report that China, the biggest foreign holder of U.S. Treasuries, could slow or stop buying government bonds. Still, given the BOJ is already holding almost a half of the market after nearly five years of massive bond buying, many traders believe the central bank has little choice but to continue with its gradual reduction in bond purchase. Meanwhile, the Nikkei business daily reported, Japan is set to push back its projections for achieving a primary budget surplus by two years to the 2027 fiscal year, highlighting the difficulty of restoring fiscal health as spending grows.

    China Premier Li says 2017 GDP growth expected around 6.9 percent
    China's Premier Li Keqiang said the world's second-biggest economy is expected to have grown around 6.9 percent last year, the official Xinhua news agency reported, accelerating from a 26-year low in 2016. In the past year, China's economy has maintained a steady and favourable trend, with the overall situation better than expected, Li said at the Mekong-Lancang Cooperation Forum on Wednesday. Analysts expect the economy to have grown around 6.8 percent last year, beating the government's target of about 6.5 percent, thanks to a construction boom and robust global demand for Chinese exports. Gross domestic product expanded 6.7 percent in 2016. The main reason why China performed well last year was because it refrained from "flooding" the economy with stimulus while pushing ahead with supply-side reforms and cultivating new sources of momentum, Li said.


    Australian retail sales surge on iPhone, Black Friday bonanza
    Australian retail sales surged past all expectations in November as consumers splashed out on Apple iPhones and Black Friday promotions, a major boost for an economy that had been struggling with sluggish spending. The figures from the Australian Bureau of Statistics showed retail sales jumped 1.2 percent in November from October, when they rose a solid 0.5 percent. That was three times the market forecast and the steepest gain since early 2013. Sales were up 2.9 percent on a year earlier at a record seasonally adjusted high of A$26.38 billion. Gains were led by a hefty 4.5 percent rise in household goods and a 2.2 percent increase for other retailing. Consumer spending has been under pressure from record-high household debt and sluggish wage growth, one reason the Reserve Bank of Australia is in no rush to raise interest rates from record lows.

    Canada increasingly convinced Trump will pull out of NAFTA
    Canada is increasingly convinced that President Donald Trump will soon announce the United States intends to pull out of NAFTA, two government sources said on Wednesday, sending the Canadian and Mexican currencies lower and hurting stocks. The comments cast further doubt on prospects for talks to modernize the trilateral North American Free Trade Agreement (NAFTA), which Trump has repeatedly threatened to abandon unless major changes are made. Officials are due to hold a sixth and penultimate round of negotiations in Montreal from Jan. 23-28 as time runs out to bridge major differences. It is not certain the United States would quit NAFTA even if Trump gave the required six months' notice, since he is not obliged to act once the deadline runs out. Notice of withdrawal could also raise opposition in Congress. Meanwhile, three Mexican sources with knowledge of the talks told Reuters on Wednesday that Mexico will leave the NAFTA negotiating table if U.S. President Donald Trump decides to trigger a 6-month process to withdraw from the trade pact.



    CHART OF THE DAY
    Bank of Japan's JGB purchase programme

    [​IMG]


    ANALYSIS
    Bets on U.S. inflation heat up in bond market

    More investors are favoring U.S. bonds that profit from a pickup in inflation as the global economy gathers momentum with oil and other basic commodity prices recently hitting multi-year highs. As a result, market forces in key economies and efforts by their policymakers might finally be aligning to lift inflation to 2 percent, a level the Federal Reserve and its counterparts in the euro zone and Japan desire but have failed to see for years, analysts and investors said. If U.S. inflation hits that elusive level, Treasury Inflation Protected Securities could score solid gains in 2018, producing higher returns than regular U.S. government bonds.


    MORNING MEETING


    Muted reaction to steady BoJ ops

    BONDS, EQUITIES, OTHER ASSET MARKETS
    • US Treasury 10s indicated 2.532%, JGB 10s 0.068%, Bund 10s 0.457%.
    • US-Japan-Germany respective 2s indicated 1.971%, -0.132%, -0.660%.
    • BoJ, as many domestic participants expected, keeps its 1 to 10-year JGB buys steady
    • But reaction muted, as JGBs already recovered prior to op announcement
    • JGB yield curve steeper ahead of Friday's 40yr auction
    • But bounce in futures puts flattening pressure on swaps
    • T-bills heavy, 3mo auction stops at -0.1162%, highest since September
    • At 150.50, futures up 15 ticks on day, range 150.53/150.41
    • Nikkei on back-foot on recent USD/JPY losses, 23,601-734 after gap down open.
    • At 23,679, index off 108 points or 0.5% on day.
    • AXJ in red too - SSEC/STI 0.15%, HSI 0.2%, KOSPI 0.4%, TWI 0.5%, ASX 0.45%.
    • NZX50 in much larger fall, -1.4% on day to 8250.

    Currency Summaries
    JPY
    • JPY buy-backs abate after BoJ stands pat on ops, China US Tsy story denied.
    • BoJ also failed to tweak lower 1-10 year JGB buys in its operations.
    • USD/JPY from 111.32 early low to 111.75, headwinds still from ahead of 112.
    • Medium/long-term JPY shorts spooked by recent moves, still want to bail.
    • Higher US yields attractive for Japanese investors despite tech weakness.
    • Nearby option expiries today on low side - 111.50-60 USD440 mln only.
    • EUR/JPY from 133.09 to 133.58, rise in EX yields, steady EUR/USD supportive.
    • GBP/JPY 150.36 to 150.86, tracks away from 150.32 late New York low.
    • AUD/JPY from 87.21 late NY, 87.30 early Asia to 87.93, retail sales frothy.
    • NZD/JPY from 80.01 late NY, 80.13 early Asia to 80.37, modest bump up.

    EUR
    • EUR/USD opened only slightly higher at 1.1948 after topping out at 1.2018 o/n.
    • Move higher on report China mulling scaling back US Treasury buying - denied.
    • EUR/JPY selling early but, more importantly, China denial pushes it back.
    • Asia from 1.1970 to 1.1945, late NY low o/n 1.1940, low Tuesday 1.1916..
    • 10-day DMA resistance at 1.1998, offers still 1.2000+.
    • Support at 1.1920 21-DMA, Tuesday low and at 1.1900, stops below.
    • German GDP and EZ IP data the key events in Europe today

    GBP
    • Cable quiet in Asia, on back-foot on China denial, 1.3516 to 1.3491.
    • Downside limited however, 1.3480-85 support, 1.3482 low yesterday.
    • Flat daily Ichi kijun below at 1.3457.
    • EUR/GBP does little in Asia, 0.8845-51, quiet, near 0.8853 55-DMA.
    • Brexit caused 37% fall in new London financial jobs in Dec - Morgan McKinley.

    CHF
    • USD/CHF in tight 0.9775-92 range in Asia, slightly better bid.
    • On hold between descending 200-DMA at 0.9776, ascending 100-DMA at 0.9792.
    • EUR/CHF hardly trades in Asia, tentative range 1.1687-1.1704.
    • Cross still holding well-above ascending 55-DMA at 1.1665.

    Market Briefs
    • Reports on China slowing U.S. debt buying could be based on wrong information
    • China Premier Li says 2017 GDP growth expected around 6.9 percent
    • S.Korea justice ministry prepares to ban cryptocurrency trading, exchanges raided
    • BoJ stands pat on JGB 1-5, 5-10 year purchase
    • Japan's December foreign reserves up to $1.264 trln, end-November $1.261 trln
    • Japan to forecast delay in budget surplus to FY2027 - Nikkei
    • Nikkei mfg index for ASEAn gives rise to concerns beyond '18
    • China says protectionist sentiment rising in US as deals fall apart
    • Canada increasingly convinced Trump will pull out of NAFTA
    • Mexico will leave NAFTA talks if Trump triggers process to withdraw
    • Australian retail sales surge on iPhone, Black Friday bonanza

    Looking Ahead - Economic Data (GMT)
    • 08:00 ES Nov Ind Output Cal Adj YY, f'cast 3.1%, 4.1% last
    • 09:00 DE 2017 Full Year GDP, f'cast 2.4%, 1.9% last
    • 10:00 EZ Nov Industrial Production YY, f'cast 3.0%, 3.7% last
    • 10:00 EZ Nov Industrial Production MM, f'cast 0.8%, 0.2% last

    Looking Ahead - Events, Auctions, Other Releases (GMT)
    • 16:30 Eurogroup President Jeroen Dijsselbloem speaks about the future of the euro zone at LSE in London
    • 20:30 Federal Reserve Bank of New York President William Dudley gives a keynote speech before the event "U.S. Economic Outlook: What's In Store For 2018," organized by the Securities Industry and Financial Markets Association in New York
    See North American Open for a detailed listing of US/NorAm releases, events

    USD/JPY-Failure to bounce keeps downside in play
    The dollar index has traded in a 1% range so far in 2018 and a clear trend has yet to emerge despite some sharp currency moves. However, the inability of USD/JPY to bounce as the BOJ keeps its purchases of 1-10 year JGBs at the same level as the previous operation and following the recent marked rally in US Treasury yields, hints at further yen strength to come. Wednesday's close below the 200 DMA suggests that the USD/JPY move lower has further to run, with a break of the Nov low at 110.85 likely as speculative JPY shorts are forced to take losses. A break of 110.85 would target a move to the 61.8 Fibo of the Sept-Nov rally at 110.15 and the psychologically important 110.00 level. On the topside, any break back above the 200 DMA is likely to run out of steam at the 100 DMA at 112.22 and the Ichi cloud base at 112.38.
     
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    [​IMG]

    WEDNESDAY, JANUARY 10, 2018



    TOP NEWS

    China may be mulling Treasuries slowdown, but options limited
    Chinese officials reviewing the country's vast foreign exchange holdings have recommended slowing or halting purchases of U.S. Treasury bonds amid a less attractive market for them and rising U.S.-China trade tensions, Bloomberg News reported. Economists cautioned, however, that China would not be able to make large changes to the composition of its reserves as it needs them to manage its renminbi exchange rate. Separately, Pimco sees this week's U.S. bond market selloff as a buying opportunity and is not ready to call the spike in 10-year Treasury yield a bear market precursor.

    U.S. import prices barely rise; wholesale inventories rebound
    U.S. import prices recorded their smallest increase in five months in December and underlying imported price pressures were muted amid declining costs for food and consumer goods. The Labor Department said import prices edged up 0.1 percent last month after accelerating 0.8 percent in November. That was the smallest gain since July and was well below economists' expectations for a 0.5 percent increase. Export prices slipped 0.1 percent in December, declining for the first time since June. Additionally, Commerce Department said wholesale inventories rebounded 0.8 percent in November, instead of 0.7 percent as estimated last month.

    Fed's Evans wants rate hike pause, not concerned on yield curve
    Chicago Federal Reserve Bank President Charles Evans said he would like to wait until mid-2018 before raising rates, and that he is not too concerned about the flattening yield curve and a potential inversion. Some of the flattening, he said, is explained by the fact that economists now believe that slower long-run growth means that interest rates in a healthy economy likely need to be only about 2.75 percent, rather than the 4 percent that was the historical norm. Separately, Dallas Fed President Robert Kaplan said the Fed must be wary of the "risk of overheating" the economy in the wake of sweeping tax cuts that could raise already unsustainable debt levels even while they boost business investment. Additionally, St. Louis Fed President James Bullard commented that sub-par inflation over the past five years has cost the U.S. economy nearly $1 trillion in nominal growth.
    Industry gives Brexit-bound UK economy a shot in the arm
    British industry enjoyed solid growth in November, benefiting from a global upturn that has allowed the economy to outperform gloomy forecasts made after 2016's Brexit vote, although it still lags behind its international rivals. But the latest official data signaled that industry remains a bright spot: Manufacturers recorded their fastest annual growth since March 2011 in the three months to the end of November, expanding by 3.9 percent year-on-year. The National Institute of Economic and Social Research said the figures pointed to GDP growth of 0.6 percent in the last quarter of 2017, which would be the strongest of the year and would lift full-year growth to 1.8 percent. Separately, Bank of England Deputy Governor Ben Broadbent said he did not know if the central bank would raise interest rates in 2018, but pointed out that its most recent forecasts showed some increases were likely in coming years.

    Steep rise in German construction bodes well for 2017 growth
    Revenues in Germany's construction industry rose in the first 10 months of 2017 and orders remained high, data showed, boosting hopes that a broad-based upswing in Europe's biggest economy is set to continue. From January to October, turnover in the main construction industry jumped by 5.6 percent compared with the first 10 months of 2016, the Federal Statistics Office said. It rose by 4.5 percent year-on-year in October. On Thursday, the Statistics Office will publish full-year gross domestic product figures for 2017, which are forecast to show 2.4 percent growth. That would be the strongest growth in six years.

    [​IMG]



    DEEP DIVE

    ANALYSIS-China's U.S. bond rebalancing would hold few fears for Fed
    Federal Reserve policymakers reacted coolly to a report on Wednesday that China could curb its massive U.S. debt purchases, pointing out that such rebalancing by countries can be healthy and would not likely disrupt the U.S. central bank's plan to trim its own bond portfolio.

    ANALYSIS-Bets on U.S. inflation heat up in bond market
    More investors are favoring U.S. bonds that profit from a pickup in inflation as the global economy gathers momentum with oil and other basic commodity prices recently hitting multi-year highs.

    BREAKINGVIEWS-China’s U.S debt talk reveals weak trade-war hand
    China’s wherewithal to play rough in a trade war with the United States is not as strong as it looks. Beijing is mulling whether to slow or halt purchases of U.S. Treasuries, Bloomberg reported on Wednesday. The reason may simply be to diversify assets. But as the largest foreign holder of Uncle Sam’s liabilities with $1.2 trillion, China also appears to have some leverage as the administration of President Donald Trump mulls imposing tariffs.


    CHART OF THE DAY

    [​IMG]


    MARKETS TODAY

    TREASURIES: Strong demand at a $20 billion 10-year government note sale stabilized a bond market that was rattled by a Bloomberg report that said China may pare or stop buying Treasuries because it sees them as unattractive amid rising U.S.-China trade tension. The Treasury Department sold $20 billion of 10-year notes to strong demand at a yield of 2.579 percent, which was the highest since July 2014. The bid-to-cover ratio was 2.69. 2-year notes were unchanged to yield 1.97 pct. 5-year notes were flat, yielding 2.33 pct. 30-year bonds fell 3/32 to yield 2.89 pct.

    FOREX: The dollar fell against a basket of major currencies after a report that China was ready to slow or halt its U.S. treasury purchases, with the greenback on track to post its biggest single-day drop against the Japanese yen in seven weeks. The dollar index was down 0.24 pct at 92.306. Against the yen, the dollar fell 1.12 pct at 111.38 yen. The euro was up 0.18 pct at $1.1957. Sterling was down 0.20 pct at $1.3512.

    CORPORATES: Corporate bond spreads were unchanged as investors remained cautious after a report showed that Chinese officials had recommended slowing or halting purchases of U.S. Treasury securities. The CDX-IG.29 index was unchanged at 46 bps.

    STOCKS: Wall Street's major indexes pared earlier losses as higher U.S. government bond yields drove gains for banks and other financial stocks. Wells Fargo rose 1.38 pct. Berkshire Hathaway gained 1.28 pct. Lennar Corp added 2.38 pct. The Dow fell 16.67 points, or 0.07 pct, to 25,369.13, the S&P lost 3.06 points, or 0.11 pct, to 2,748.23 and the Nasdaq dropped 10.01 points, or 0.14 pct, to 7,153.57.

    C&E: Oil rose but backed away from three-year highs after U.S. government data showed an increase in fuel inventories and a falloff in refining activity. U.S. crude inventories fell 4.9 million barrels last week, more than the 3.9-million decline forecast, but bigger-than-expected builds in gasoline and fuel stocks offset that drawdown, the EIA reported. U.S. crude was up 0.73 pct at $63.42 a barrel. Brent rose 0.33 pct to $69.05 a barrel. Gold rose 0.39 pct to $1317.65 an ounce. Reuters-Jefferies index added 0.37 pct at 198.06.


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