The USD rocket just can’t stop and is verging on breakout. All other majors are tumbling:
Commodity currencies were mixed:
Gold held on, just…
Brent took off as OPEC resumed jawboning:
Base metals were mixed, copper still crazy:
Big miners were smashed:
US and EM high yield debt hockey sticked it on oil:
EM stocks too:
The US curve flattened, perhaps spooked by its own rapid steepening:
Stocks bounced:
Is it any wonder that the USD is on a tear? Japan is mulling rate cuts to the centre of the earth. China is conspicuously devaluing and capital flight appears verging on out-of-control again. Europe looks terrible with it bending the UK over a BREXIT barrel, from the FT:
The EU’s Brexit negotiators are pushing for a draft UK exit deal by mid-2018 as part of a narrow, divorce-first negotiating approach that would demand an exit bill of as much as €40bn-€60bn.
Brussels’ rigid plans for the process, outlined to the FT by senior officials, show it is making a priority of a clean separation settlement — and Britain’s payment of a hefty exit charge — over London’s desire to focus on refashioning trading relations.
Assuming Britain starts formal Article 50 divorce talks in March 2017, the EU aims to complete a draft exit deal by autumn 2018 at the latest, leaving at least six months to ratify and prepare for Britain’s full exit at a set date in 2019. The European Commission recommends no detailed trade talks be carried out before a draft agreement on Article 50, but envisages transitional arrangements being tied to the exit deal.
While Italy’s referendum gallops away with the de-globalisation revolution, via Reuters:
Opinion polls are making increasingly grim reading for Italian Prime Minister Matteo Renzi less than three weeks ahead of a referendum on constitutional reform on which he has staked his political future.
Of 32 polls published by 11 different pollsters since Oct. 21, every one has the ‘No’ camp ahead, and generally by a widening margin.
In three polls published on Monday the lead for ‘No’ ranged from five points, according to IPR Marketing, to seven points, according to Tecne, with EMG Acqua in the middle at 6 points.
These results exclude undecided voters, which are estimated at 25.9 percent by EMG Acqua and 16.5 percent by Tecne. The most worrying aspect for Renzi is that as the number of undecided voters declines, the lead for ‘No’ appears to be rising.
Bookmakers also hold out little hope for the 41-year-old premier, with Ladbrokes estimating a roughly 75 percent probability of a win for ‘No.’
Italian spreads eased on the night with wider markets it ain’t over:
I mean, who’s going to buy the zombieuro?
Meanwhile, US data is solid, from Merrill Lynch:
Retail spending surged 0.8% mom in October, building on a 1.0% pop in September (revised up from 0.6%). Core retail sales also came in at a robust 0.8%, which was well above expectations of 0.4%. In addition, September and August core sales were revised up to 0.3% from 0.1% and 0.1% from -0.1%, respectively. Election uncertainty looked to have had no impact on the consumer, though Hurricane Matthew may have been a drag since eating & drinking sales tumbled 0.7% mom. These data boosted our 4Q GDP tracking estimate by 0.4pp to 2.4%, as well as our 3Q estimate by 0.2pp to 3.2%
And GDP now is 3.3%:
Oil bounced on OPEC’s ruminations which said little new but if it does get a decent cut away, say one million barrels per day or more, that will lock in US inflation via both sustained oil prices at $50 and better activity via the shale recovery.
I can see the rise of the USD ahead turning disorderly…
