JASPER’S MARKET SQUAWK 16-08-2023

<h2>Markets Pressured by Rising Yields</h2>
<p>A series of data points pushed global yields higher and depressed equity markets, with the benchmark US 10-year yield briefly touching a high not seen since October last year.</p>
<p><img decoding="async" loading="lazy" class="alignnone size-full wp-image-25015" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-5.png" alt="" width="1752" height="834" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-5.png 1752w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-5-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-5-1024×487.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-5-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Untitled-design-5-1536×731.png 1536w" sizes="(max-width: 1752px) 100vw, 1752px" /></p>
<p>Chart: WTI</p>
<h2>Key Factors For Today</h2>
<ul>
<li>US Retail Sales Beat Expectations, Dow Plunges 1%</li>
<li>UK Jobs Data Supports BOE Rate Hike, Cable Rises</li>
<li>API Reports WTI Draw, but China Concerns Trigger Drop in Crude Prices</li>
<li>Kiwi Continues Losing Streak After RBNZ Announcement</li>
<li>Canada’s CPI Weakened, US Dollar Gains Against the Loonie</li>
</ul>
<h2>US Retail Sales Send Dow Tumbling 1%</h2>
<p>Advance July US retail sales beat expectations across the board, with the headline figure advancing 0.7% compared to 0.4% expected. August Empire manufacturing fell to the lowest since May at -19 compared to -1 expected, and new orders fell -19.9 from +3.3 prior.US equities received a blow as the hotter retail data reinforced the Fed’s case of hiking. Dow lost 1%, down below 35k, and with the door to 34620 widely open. Meanwhile, rating agency Fitch said it could downgrade “dozens” of US banks, including major ones, if the US banking industry gets another one-notch downgrade.</p>
<h2>UK Jobs Data Support BOE Hike, Cable Up</h2>
<p>The claimant count in the UK reversed expectations at +29K compared to -30K expected, with the unemployment rate increasing to 4.2%. Any relief the BOE might have had over that figure was dashed by rising average earnings at 8.2%, well above the 7.1% expected and approaching the inflation rate. Gilts rose as the market fully priced in a 25bps rate hike in September, with some analysts suggesting that 50bps might be possible. Cable saw a slight increase to $1.27, pending further breaks upwards of $1.2718 or downwards of $1.2680.</p>
<h2>API Sees WTI Draw, But China Triggers 1.77% Drop</h2>
<p>The API weekly inventories showed a large drawdown of -6.2M bbl, compared to a -2.1M bbl drawdown forecast. The DOE reported a 0.8M bbl increase in the SPR as it finally gets replenishing the reserve underway. Concern over the shadow banking system in China, however, pushed crude prices down before the release and continued to drag on prices through the rest of the trading session as investors worry about future slowing demand from the world’s largest importer. The 1.77% drop increased the chances of an $80/bbl retest, with a breakdown offering support at $79.10/bbl. Getting through $81.60/bbl may revive the bullish case.</p>
<h2>Kiwi Records 6th Day of Losses Ahead of RBNZ</h2>
<p>The RBNZ left policy unchanged and expressed confidence that the current rate will bring inflation down to the target in a reasonable timeframe. There was a bit of confusion around the statement, initially interpreted as signalling a rate hike a year from now. Still, Governor Orr walked that back in his post-decision press conference, clarifying that the comment about seeing 25bps in the future was not guidance. The RBNZ reiterated its projections that the economy would slip into a technical recession but cut its outlook for the third quarter further negative, keeping the Kiwi under 60 cents for the sixth day of consecutive losses with chances at seven increasing. Softening price action could see the pair reach as low as 59 cents unless bulls reclaim $0.5973 sooner than later.</p>
<h2>Canada BOC-Watched CPI Weakens Loonie</h2>
<p>Annual inflation in Canada for the month of July jumped to 3.3% from 2.8% prior and above forecasts of 3.1%. But the measure most closely followed by the BOC, the trimmed-mean rate, was just slightly below expectations, ticking down to 3.6% from 3.7% prior. USD/CAD advanced 0.27% to $1.35, opening up $1.3570 should the bulls continue defending the $1.3466 swing.</p>
<h2>On The Docket</h2>
<ul>
<li>UK Inflation</li>
<li>EA Employment Change</li>
<li>EA GDP Growth</li>
<li>Building Permits</li>
<li>Housing Starts</li>
<li>Industrial Production</li>
<li>EIA Crude Oil Stock Change</li>
<li>FOMC Minutes</li>
<li>Japan Trade Balance</li>
<li>Spain Consumer Confidence</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie 0.08% lower, while Kiwi 0.27% up</li>
<li>Euro 0.13% higher, Pound up by 0.03%</li>
<li>Yen up by 0.08%, Swissy by 0.03% only</li>
<li>Loonie 0.05% lower down</li>
<li>Gold up by 0.04% while Silver up by 0.08%</li>
<li>Crude and Brent 0.43% and 0.46% down</li>
<li>Natural gas also down, by 0.42%</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-16-08-2023-25011/">JASPER’S MARKET SQUAWK 16-08-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>