Morning thoughts from Capital Edge’s Arno Venter (be sure to check out his Discord Channel)
In terms of
Powell’s comments, I have seen a lot of takes on his comments with the majority
saying Powell was ‘very hawkish’, ‘overly hawkish’ or ‘more hawkish than
expected’.
I offer you
exhibit a (Powell’s comments from 1 Nov):
And exhibit b (Powell’s comments last night).
If we are
really honest with ourselves the comments from last night are not really
different from what we heard last week.
I think the
bond market moves explain the market’s reaction last night, we don’t have to go
put the blame on Powell.
Risk
sentiment all over the place this morning following last night’s price action
after Powell’s comments (which wasn’t overly hawkish beyond popular belief) and
the 30-year auction.
Let’s start
with equites, where Asia-Pac and EMEA has traded soft, while US equity futures
are close to flat following last night’s sell off (if we can call it that).
More noise
than signal from commodities today with WTI (+48%) and BRENT (+0.52%) higher,
while precious metals and base metals are mixed.
Over to
bonds which is trading mostly lower across the board following last night’s
30-year auction. If there is one reason for equities to feel uneasy today it
should be the 30-year auction (not Powell’s comments).
The tail on
the 30-year came in over basis points, and dealers ending up with 24% which was
far above prior numbers).
There was
news that said a hack could have been the reason for the move so just keep that
in mind.
The FX
space is once again trading more constructive on the risk side heading into the
open with high beta NZD and CAD higher, with JPY and CHF the clear laggards.
The USD is mixed (but watch the 106 which has been a key pivot for price action
in recent weeks).