JASPER’S MARKET SQUAWK 09-08-2023
<h2>Risk Off on Trade, Downgrades</h2>
<p>Equity markets around the globe were in the red following China’s disappointing trade data, with the dollar firming up despite lower yields, pressured by Moody’s downgrade of US banks.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-24871 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-72.png" alt="" width="1751" height="829" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-72.png 1751w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-72-300×142.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-72-1024×485.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-72-768×364.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-72-1536×727.png 1536w" sizes="(max-width: 1751px) 100vw, 1751px" /><em><strong>Chart: XWTI</strong></em></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Moody’s downgraded 10 US banks, raising concerns about the resilience of the banking sector</li>
<li>Germany’s CPI is in line with expectations, while ECB expects inflation to fall</li>
<li>API reported build in crude inventories, contrary to expectations, while the EIA maintained projections for demand</li>
<li>New Zealand’s inflation expectations are slightly lower than expected</li>
<li>China is in deflation, driven by lower food prices and factory-gate prices</li>
</ul>
<h2>Moody’s Downgrades 10 US Banks, Dollar Rises</h2>
<p>After the close on Monday, rating agency Moody’s announced a series of downgrades and warnings of downgrades on several major US banks, which renewed concern over the resilience of the banking sector. The move added to a series of headwinds facing risk appetite, including the slowing trade report from China and expectations that the Biden Administration would announce new curbs on investment in China later today. The NY Fed quarterly household debt report showed that delinquencies in the second quarter remained at an 11-year high, with total credit card balances surpassing $1T for the first time ever. USD/JPY rose 0.62% to 143.37, from a low of 142.48 on Tuesday, but faces the 143.90 ceiling ahead. Support is seen at Tuesday’s low, and the 142.00 handle is under there.</p>
<h2>German CPI in Line, ECB Sees Inflation Falling</h2>
<p>Germany’s final July CPI figure was confirmed at 0.3% monthly growth and an annual rate of 6.2%. The ECB’s consumer expectations survey showed inflation falling in the next twelve months to 3.4% compared to 3.9% prior. EUR/USD lost $1.10 relatively quickly on a stronger dollar, but the price received rejection at $1.0930. Defending the daily low may see the pair tick higher again, with expected resistance higher near $1.1020.</p>
<h2>API Reports Build, WTI Slightly Higher Ahead of EIA</h2>
<p>The API survey showed crude inventories grew by 4.1M bbl last week, compared to an expected drawdown of 0.2M bbl. The EIA affirmed its projections for this year’s crude demand, seeing it grow by 1.76M bbl/d, and saw Brent crude prices averaging $86/bbl in the second half of the year. WTI barely moved on Tuesday, with a few cents added to Monday’s close at $82.50/bbl. $81.60 and $84.50/bbl remain levels to keep a close eye on.</p>
<h2>New Zealand CPI Expected Lower, Kiwi Drops</h2>
<p>The New Zealand Q3 Inflation Expectations Survey saw inflation one year from now at 4.2%, slightly lower than the 4.3% expected previously. Two-year inflation is seen falling to 2.8%, below the top end of the RBNZ’s 1-3% target band. The survey also showed that GDP growth would increase over the next two years. With a stronger dollar on Tuesday, the Kiwi lost 0.67% and seems somewhat muted early Wednesday. A slide under $0.6035 will expose the 60-cent barrier, whereas rising past $0.61 has resistance at $0.6131.</p>
<h2>China Returns to Deflation</h2>
<p>Headline CPI in China fell 0.3% annually compared to a drop of 0.4% expected. Monthly inflation rose by 0.2%, however, which suggested that the result was due to base effects. Lower food prices were seen driving the deflationary move as well. Factory-gate prices remained in deflation. Lower commodity prices are also seen driving the deflationary narrative, with the potential for demand for gold coming under pressure. With firmness in the dollar, gold dropped 0.60% to $1935 per ounce, opening up $1917 unless bulls can reclaim $1936 per ounce. Early Wednesday, the yellow metal is upbeat as bulls attempt to get past $1930 per ounce at the time of writing.</p>
<h2>On The Docket</h2>
<ul>
<li>10-Year Treasury Gilt Auction</li>
<li>MBA 30-Year Mortgage Rate</li>
<li>EIA Crude Oil Stocks Change</li>
<li>10-Year Note Auction</li>
<li>RICS House Price Balance</li>
<li>Japan PPI</li>
<li>Spain’s Consumer Confidence</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi 0.18% and 0.15% up</li>
<li>Euro 0.17% higher, Pound behind at 0.13%</li>
<li>Yen is 0.15% up, Swissy stronger at 0.17%</li>
<li>Loonie only looser at 0.03% loss</li>
<li>Gold is 0.27% up, while Silver is higher at 0.63%</li>
<li>Crude and Brent 0.28% and 0.24% lower</li>
<li>Natural gas is higher by 0.14%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-09-08-2023-24860/">JASPER’S MARKET SQUAWK 09-08-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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