Morning Update – 10/02/2017 – by Arjun Lakhanpal
February 10, 2017Morning all.. Another record close on Wall St as trump tells the markets what they wanted to hear regarding potential tax cuts in the offering. This sent stocks, US yields and the dollar higher with the S&P up 0.58%. This euphoria carried over into Asia with the Nikkei up an impressive 2.49% as USDJPY rallied 1.3% to make a high at 113.80. This rise in the dollar hit gold and silver quite hard. White House: Trump & Abe to hold press conference on Friday 1pm ET; tax plan will spur economic growth, give relief to working Americans (reminder: Trump said he will release a tax plan in 2-3 weeks); Trump has spoken to Congress about tax plan, there is a push to achieve bipartisan support for tax plan; Trump wants to do what he can to have fruitful, constructive relationship with China.. China Pres Xi (State TV, after phone conversation with Trump): Trump agreed to honour ‘One China’ policy; told Trump willing to work together to strengthen communication and expand cooperation; should jointly address global challenges. This all sounds more diplomatic and is encouraging risk again. Japan’s central bank continued to intervene in the JGB curve and increased super-long JGB purchases by ¥20bn in Friday’s op; offered to buy ¥200bn in 10-25y (vs ¥190bn) and ¥120bn in 25y+ (vs ¥110bn).. China data was strong as China Jan Trade Surplus: $51.35bn vs $50bn cons; Imports +16.7% y/y vs +10% cons; Exports +7.9% y/y vs +3.1% cons.. RBA quarterly statement cut GDP f/c for June ’17 by 1ppt to 1.5-2.5%, Dec unchanged at 2.5-3.5%, June ’19 f/c 2.75-3.75%; appreciating AUD could complicated economic transition; inflation shows signs of having stabilized.. This morning we get French Industrial production and UK Trade balance and Industrial production and construction output.. Good luck..
