NZD: Firmer As Risk-On Tone Develops
NZD/USD prints at $0.6400/10, ~0.5% firmer today, with only NOK a better performer in G-10 space at the margins.
- An offer in USD/JPY, likely driven by the move above 0.5% in 10 year JGB yield, has spilled over into further USD weakness. NZD/USD has broken through $0.64, bulls look to sustain the break of the key level.
- AUD/NZD is little changed as the pair see-saws around the 200-day EMA at $1.0913. NZD/JPY is ~0.4% firmer, last printing at ¥81.80.
- Cross asset flows have seen a mild risk on tone develop, with both USD softer and local and regional Equities are firmer.
- With a light regional data calendar for the remainder of the session wider swings in risk appetite will be the main driver for NZD.
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US TSYS: Yield Curves Bounce Back to Pre-FOMC Levels, 2Y Rally
Yield curves broadly steeper after the bell, short end lead rally off morning lows, 2YY at 4.1888% -.0475 after tapping 4.1531 low, 2s10s +8.518 at -70.892 -- back to pre-FOMC levels
- Market's way of discounting the week's hawkish Fed and ECB policy speak and forward guidance. Equities NOT taking a risk-on/dovish pricing view w/ SPX eminis -50.0 at 3877.25 (after bouncing off key support of 3855.13 50.0% - retracement of the Oct 13 - Dec 13 uptrend).
- Tsys bounced off lows following PMI data: The Fed will be encouraged that the crucial theme of weakening demand in the economy - leading to more modest inflation - played out further in this morning's Nov prelim US PMIs.
- The activity data overall remain contractionary, and are deteriorating: Composite at 44.6, a 4-month low), Services at 44.4 (4-month low), and Manufacturing at 47.4. (a 31-month low).
- Demand is weakening, as evidenced by the fastest decline in new orders since May 2020 with "pressure on purchasing power among customers and company balance sheets".
- Fed speak: little market react from SF Fed Daly riffing on familiar theme: Fed Still Has a ‘Long Way’ to Go to Defeat Inflation. Cleveland Fed Mester: "leaving inflation at these levels for long is costly".
US STOCKS: Late Equity Roundup: Key Support Held
Stocks weaker but well off key support of 3855.13 50.0% (retracement of the Oct 13 - Dec 13 uptrend) to 3882.50 in late trade. Real Estate, Consumer Discretionary and Utilities sectors continued to weigh on SPX eminis, currently trade -41.25 (-1.05%) at 3886.75; DJIA -268.49 (-0.81%) at 32941.94; Nasdaq -89.6 (-0.8%) at 10721.73.
- SPX leading/lagging sectors: Real Estate (-3.21%) with Prologis (PLD, Ventas (VTR), Welltower (WELL) and Iron Mountain (IRM) shares all trading more that 5% lower; Consumer Discretionary (-1.89%) weighed by auto makers: Ford -6.49%, Tesla -4.44%, GM -3.62%; Utilities (-1.63%) saw water services underperforming
- Leaders: Communication Services (-0.07%) with META, Netflixx and Fox bouncing from midweek selling, Materials (-0.41%) and Consumer Staples (-0.53%) followed.
- Dow Industrials Leaders/Laggers: United Health (UNH) off lows at 521.48 (-6.20), Home Depot (HD) -5.86 at 321.74, American Express (AXP) -5.0 at 145.22.
- Leaders: Caterpillar (CAT) +1.29 at 231.95, Amgen (AMGN) +30.0 at 266.44, Dow Ind -0.16 at 49.37.
US: FED Reverse Repo Operation
NY Fed reverse repo usage climbs to $2,126.540B w/ 100 counterparties vs. $2,123.995B in the prior session. Prior record high stands at $2,425.910B on Friday, September 30.
NY Federal Reserve/MNI
