The collision of global markets and social mood

Thursday, June 30, 2016

Thursday -- PBoC, IMF Outs DB, Soros, Bullard, VIX, Holidays

S&P E-mini Futures:
Still hovering up, up, up overnight.

News:
Even the PBoC couldn't knock out the markets last night when it was rumored and promptly denied that it would further devalue the yuan to 6.80. With the upcoming July 4th Independence Day holiday in the USA, I wouldn't put it past China to follow through on it while our markets are closed and everyone is watching Wimbledon (brilliant scheduling by the Brits).

More hope. Mitsushige Akino, a Tokyo- based executive officer at Ichiyoshi Asset Management, commented to Bloomberg by phone. “There’s hope for policy measures globally, not just in Japan, so that’s supporting markets”

Bank watch list: "Among the G-SIBs (globally systemically important banks), Deutsche Bank appears to be the most important net contributor to systemic risks, followed by HSBC and Credit Suisse," the IMF said in its Financial Sector Assessment Program, via Marketwatch.com

George Soros told the European Parliament in Brussels to be more like Ben if it wants to reverse the deflationary trends that are already prevalent throughout the EZ, saying that former Federal Reserve Governor Ben Bernanke had the “right approach" during the financial crisis.

We know what needs to be done," he added. Hint, hint.

Except that *what's been done* has only made assets go higher, but has done little to heal underlying imbalances.

Warning. St. Louis Fed president Bullard speaks in London at 3:15pm EDT. Seems to be the Fed's loose cannon of choice.

FX:
JPY & CHF stronger, AUD & CAD weaker. USD firm. Shaping up for an interesting day, possibly Risk Off, or more probably, a little risk off the the table ahead of the long weekend after a huge bounce.

Treasuries:
Mammoth overnight volume in US 10-year notes. Perhaps a signal that the move to higher highs in treasuries is coming soon. After that, things could get interesting.

Regarding JGBs, “Only God knows how far yields will fall,” Souichi Takeyama, a rates strategist at SMBC Nikko Securities Inc. in Tokyo, told Bloomberg.

In other words, sentiment is extreme.

But then there was this JGB thing, from Ransquawk"The latest securities transaction figures showed foreign investors rapidly increasing their selling of Japanese bonds in the prior week."

Scary.

Energy:
WTI crude giving back some recent gains. NG looks ready for still more highs.

Metals:
Gold and platinum down, while silver, palladium, and copper rally.

S&P Outlook:
E-mini futures blew doors on 2064.75 and closed above it.

The S&P cash closed above the 61.8% retracement of 2069.95.

Volatility has fallen over 40% from its Brexit high. Bot some VIX 25 August calls to hedge XIV which shot to the moon this week.

I rate the pattern and structure as bullish ultimately, but see room for more exploration lower in the near to medium term. It doesn't feel like the recent fireworks are simply "one and done."

But for now we should expect End Of Month and pre-holiday bias to be higher, as it usually is.

Next week could be a whole different story though.

Speaking of holidays, tomorrow is my last day for a while. Taking a long holiday to visit my family and friends back in New England. So tomorrow's post will be it for a bit.


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