Morning thoughts from Capital Edge's Arno Venter (be sure to check out his Discord Channel)
In terms of Powell’s comments, I have seen a lot of takes on his comments with the majority saying Powell was ‘very hawkish’, ‘overly hawkish’ or ‘more hawkish than expected’. I offer you exhibit a (Powell's comments from 1 Nov):
And exhibit b (Powell's comments last night).
If we are really honest with ourselves the comments from last night are not really different from what we heard last week.
I think the bond market moves explain the market’s reaction last night, we don’t have to go put the blame on Powell.
Risk sentiment all over the place this morning following last night’s price action after Powell’s comments (which wasn’t overly hawkish beyond popular belief) and the 30-year auction.
Let’s start with equites, where Asia-Pac and EMEA has traded soft, while US equity futures are close to flat following last night’s sell off (if we can call it that).
More noise than signal from commodities today with WTI (+48%) and BRENT (+0.52%) higher, while precious metals and base metals are mixed.
Over to bonds which is trading mostly lower across the board following last night’s 30-year auction. If there is one reason for equities to feel uneasy today it should be the 30-year auction (not Powell’s comments).
The tail on the 30-year came in over basis points, and dealers ending up with 24% which was far above prior numbers).
There was news that said a hack could have been the reason for the move so just keep that in mind.
The FX space is once again trading more constructive on the risk side heading into the open with high beta NZD and CAD higher, with JPY and CHF the clear laggards. The USD is mixed (but watch the 106 which has been a key pivot for price action in recent weeks).
