The Daily Shot: 24-Sep-24
• China
• Asia-Pacific
• Japan
• The Eurozone
• The United Kingdom
• Canada
• The United States
• Emerging Markets
• Cryptocurrency
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
China
1. Beijing has rolled out a no-holds-barred monetary easing package.
Source: CNBC Read full article
• RRR:
• Reverse repo:
• Another stock market bailout:
Source: @economics Read full article
With investors significantly underweight in China’s equities, …
Source: Goldman Sachs; @WallStJesus
… stocks surged in response to the new stimulus measures.
Source: @TheTerminal, Bloomberg Finance L.P.
• Monetary stimulus became crucial as fiscal spending slowed, driven by weaker government revenues.
Source: @economics Read full article
——————–
2. Iron ore futures jumped almost 6%.
3. China’s currency continues to strengthen.
4. The World Economics China Manufacturing SMI dipped into contraction territory as margins fell further.
Source: World Economics
• The services SMI showed slower growth..
Source: World Economics
——————–
5. China has been handing out subsidies to car buyers.
Source: @economics Read full article
6. The recent declines in China’s narrow money supply suggest weaker imports in the coming months.
Source: SouthBay Research
Back to Index
Asia-Pacific
1. South Korea’s exports dipped below last year’s levels this month.
2. Next, we have some updates on Australia.
• The RBA maintained the current interest rates, and Governor Michele Bullock indicated that a rate hike was not actively deliberated, even though inflation continues to persist. Bond yields dropped.
• Yield differentials still point to a higher AUD/USD exchange rate.
Source: Deutsche Bank Research
• The September PMI report revealed a deeper slump in Australia’s manufacturing sector.
– Services growth slowed.
Back to Index
Japan
1. The manufacturing PMI held in contraction territory this month, …
… as export orders dropped further.
Manufacturers’ outlook weakened.
• Service firms continue to report growth.
——————–
2. Japan’s wage growth is accelerating as G10 wages ease.
Source: Deutsche Bank Research
3. The JGB curve has been steepening.
Back to Index
The Eurozone
1. As we saw yesterday, the euro-area PMI reports were disappointing this month.
• Germany’s manufacturing slump worsened amid soft demand.
– The manufacturing employment index hit the lowest level since the COVID shock.
– Outlook deteriorated.
• French manufacturing activity also held deep in contraction territory.
• French services activity unexpectedly contracted.
Source: VOA Read full article
– Fewer French firms are reporting rising costs.
• Germany’s services sector held in growth territory (barely).
But services employment slumped.
• Total business activity contracted at the Eurozone level, …
… with employment now shrinking.
– Price pressures continue to ease.
——————–
2. The Citi Economic Surprise Index declined sharply.
3. Short-term market-based rates continue to fall.
• The Bund curve has been steepening.
• French bond spreads widened again.
——————–
4. The market is pricing in about 44 bps of ECB rate cuts before the end of the year.
Source: @TheTerminal, Bloomberg Finance L.P.
Back to Index
The United Kingdom
1. Factory activity growth slowed this month.
The August hiring surge has come to an end.
• The services PMI also held in growth territory.
Services outlook remains strong.
——————–
2. The CBI report indicated a continued slump in industrial orders.
Outlook deteriorated.
——————–
3. The Citi Economic Surprise Index declined further, …
… but UK economic data continues to outperform DM peers, which has benefitted GBP. (2 charts)
Source: Deutsche Bank Research
Source: Deutsche Bank Research
• The pound continues to climb.
Back to Index
Canada
1. Consumer confidence is rebounding (2 charts).
Source: @TheTerminal, Bloomberg Finance L.P.
——————–
2. July retail sales topped expectations.
Back to Index
The United States
1. The September manufacturing PMI indicated further deterioration in factory activity, …
… as international demand slumps.
The manufacturing employment index hit its lowest level since the COVID shock.
• Service firms continued to report robust growth this month, …
… but the outlook softened ahead of the elections.
• More services firms report rising prices.
• The PMI employment data signals a soft payrolls print for September.
Source: Pantheon Macroeconomics
——————–
2. The World Economics SMI (combined services and manufacturing) showed slower growth this month as sentiment deteriorates.
Source: World Economics
3. Jumbo rate cuts remain on the table.
Source: @economics Read full article
• Goldman sees 25 bps rate cuts at each of the next few meetings.
Source: Goldman Sachs
——————–
4. Here is Goldman’s forecast for US consumer spending.
Source: Goldman Sachs; @MikeZaccardi
5. Around 45,000 dockworkers at major ports along the East and Gulf coasts are threatening to strike in October. A prolonged strike could lead to a spike in prices by disrupting supply chains.
Source: @economics Read full article
Source: @financialtimes Read full article
Back to Index
Emerging Markets
1. Mexico’s economic activity continued to climb in July.
Retail sales jumped.
——————–
2. India’s PMI indicators point to robust but somewhat slower growth in September.
• Services hiring accelerated.
Back to Index
Cryptocurrency
1. ETH/USD is holding uptrend support and appears oversold.
• The BTC/ETH price ratio is testing long-term resistance.
——————–
2. Crypto funds saw a second straight week of inflows led by bitcoin-focused products, while ether-focused products saw outflows. (2 charts)
Source: CoinShares Read full article
Source: CoinShares Read full article
——————–
3. Digital assets are increasingly correlated to stocks.
Source: @markets Read full article
Back to Index
Equities
1. The S&P 500 and the S&P 500 equal weight index hit another record high.
2. What are the drivers of the current rally? This chart is based on Bloomberg’s attribution model.
Source: @TheTerminal, Bloomberg Finance L.P.
3. Stocks tend to perform better in weeks with no major macro data releases.
Source: BofA Global Research; @dailychartbook
4. Here is a look at EPS growth by sector in Q2.
Source: S&P Global Market Intelligence Read full article
5. Driven by the AI race, US tech giants are boosting CapEx.
Source: S&P Global Market Intelligence Read full article
6. A wide spread between the Taylor Rule and the Fed funds rate could allow for incremental value expansion in the S&P 500.
Source: @GinaMartinAdams
7. This chart compares the return on invested capital and average revenue between EU and US listed companies.
Source: The Economist Read full article
8. Share buyback activity remains robust.
Source: Goldman Sachs; @WallStJesus
Back to Index
Credit
1. Distressed exchanges have increasingly become the dominant path for managing default exits.
Source: S&P Global Ratings
2. Corporate bond fund inflows remain strong, while leveraged loans are experiencing outflows as short-term rates decline.
Source: JP Morgan Research; @GunjanJS
3. Small caps are facing a steeper debt maturity wall than large caps.
Source: BofA Global Research; @MikeZaccardi
Back to Index
Rates
1. The Treasury curve continues to steepen.
2. Here are the drivers behind the changes in the 10-year Treasury yield, as identified by Bloomberg’s model.
Source: @TheTerminal, Bloomberg Finance L.P.
3. Coupon Treasury auctions have been massive.
Source: Deutsche Bank Research
Back to Index
Global Developments
1. The dollar’s reaction to Fed rate cuts can vary widely, largely depending on whether or not the US enters a recession.
Source: Deutsche Bank Research
• Most of the dollar’s weakness tends to manifest leading up to the Fed’s first rate cut.
Source: Deutsche Bank Research
• What are the drivers of the recent weakness in the US dollar?
Source: @TheTerminal, Bloomberg Finance L.P.
——————–
2. Here is a look at market pricing of policy rate moves across developed economies.
Source: Deutsche Bank Research
——————–
Food for Thought
1. America’s favorite car brands by generation:
Source: Visual Capitalist Read full article
2. Spending on pets:
Source: The Economist Read full article
3. Rising share of auto loans with monthly payments of $1,000 or more:
Source: Experian Read full article
4. US depression rates:
Source: Statista
5. Regulating the use of AI in political campaigns:
Source: @axios Read full article
6. Active users on Twitter:
Source: @financialtimes Read full article
7. Reasons for shopping or not shopping at farmers’ markets:
Source: @CivicScience Read full article
——————–