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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
EXECUTIVE SUMMARY:
- Markets are looking ahead to the BOC and FOMC meetings later today, which has limited moves in core FI this morning.
- Equities continue to rebound, led by Europe.
- Natgas prices recede in Europe.
- Biden said to consider personal sanctions on Putin if Russia invades Ukraine (various media sources).
NEWS:
MNI Fed Preview:
- The FOMC will continue its hawkish shift at the January meeting, using the Statement to signal that a rate hike is coming in March. But with a March hike and 4 2022 hikes priced in, hawkish risks are fairly limited, and lack of a clear intention to liftoff at the next meeting in the Statement would be met with a dovish market reaction. The main hawkish risk potential comes from balance sheet communications, starting with a potential end to asset purchases a month earlier than expected. For the full MNI Fed Preview click here.
MNI BOC Preview:
- The Bank of Canada decision will be released at 15:00GMT. The OIS market is pricing in ~70% chance of a first 25bp hike. Bloomberg has consensus the other way with a steadily falling majority of 15:12 in favour of holding. The MNI Markets team expects the BoC will hike this week. Governor Macklem has previously indicated that price stability is “job one” for the BoC and that “time is getting closer” to remove forward guidance of lift-off in mid-2022. OIS pricing more than five hikes in 2022 could limit potential for a materially hawkish surprise. For the full MNI BoC Preview click here.
G7: Germany will host the main finance meeting of its presidency of the Group of Seven economic powers from May 18-20, the Rheinische Post newspaper reported on Wednesday (Reuters)
Ukraine: Russia to respond to west's 'aggressive' Ukraine steps (Bloomberg)
Ukraine: US President Joe Biden says he would consider personal sanctions on Vladimir Putin if Russia invades Ukraine. (BBC)
NATGAS: European natural gas prices fell as more flows from Russia are expected to help relieve the tight market amid risks of an escalating conflict with Ukraine. Orders to send gas through Ukraine via Velke Kapusany, a major entry point in Slovakia, jumped as much as 36% on Wednesday to the highest level since Dec. 31, according to data from operator Eustream (Bloomberg)
DATA:
MNI CHINA LIQUIDITY SURVEY: Liquidity across China's interbank market withstood early year volatility and an improved economic outlook, according to the latest MNI Liquidity Conditions Index. The Liquidity Condition Index slid to 33.9 in January -- for the first time in two years liquidity was looser in the first month of the year compared to the previous December. Half of the traders surveyed saw condition as "better" due the latest injections from the central bank.
FRANCE DATA: FRANCE JAN CONSUMER CONFIDENCE 99; DEC 100
FIXED INCOME: Most of the early action is in Equity
- Bund are trading close to mid range at the time of typing 170.44 (vs 170.25/170.58 range).
- The contract did trade through initial support noted yesterday at 170.36, and it printed an overnight low at 170.29, followed by a 170.25 low during the early European trading session.
- Rates and Govies are more stable as the Globe await for the FOMC meeting later.
- Peripheral spreads are a touch tighter versus the German 10yr, with Italy leading by 1.1bp.
- Gilts are lagging somewhat, as desk price a more punchy hiking cycle from the BoE going forward.
- The Gilt/Bund spread is 1.4bp wider, but short of the 2022 high at 126.5084bps, now at 125.5bps.
- A lot quieter session for US Treasuries, when you look at volumes, and Bund trading more than its US counterpart.
- Tnotes have not broken any of the overnight range (128.02+/128.08+), 128.03+ at the time of typing for the 10yr.
- ALL EYES are of course on the Fed, and markets are so far pretty much pricing a hike for March, June, Sep and Dec.
- Looking ahead, there are no tier 1 data, and the only notable release pre Fed, will be the US Wholesale Inventories.
- Supplies, sees US $26bn 2yr FRN. While earning season continues with AT&T, Boeing, Abbot Labs, Intel, Tesla.
FOREX: Oil tied FX are the best early performer
- A steady range bound session for FX and the USD, with most of the early action seen on the bounce in Equities, but very little spillovers across assets.
- Best early performers in G10 against the Greenback are the NOK and CAD.
- Oil (WTI) pushed higher, and through Monday's high at $86.09, now at $86.18.
- NOK and CAD are up 0.59% and 0.35% respectively.
- Support in USDCAD is at 1.2555, but move may be somewhat limited with market participants waiting on the BoC decision.
- Risk tied FX, Aussie has been supported this morning, on the back of the Risk On in early trade.
- The Aussie trades in the green against all G10s, beside the Oil linked NOK and CAD..
- Looking ahead, today sees no tier 1 data, and the only notable release pre Fed, will be the US Wholesale Inventories
- Earning season continues, which today include AT&T, Boeing, Abbot Labs, Intel, Tesla
EQUITIES: LEVELS UPDATE: Strong moves higher, particularly in Europe
- Japan's NIKKEI down 120.01 pts or -0.44% at 27011.33 and the TOPIX down 4.77 pts or -0.25% at 1891.85
- China's SHANGHAI closed up 22.607 pts or +0.66% at 3455.668 and the HANG SENG ended 46.29 pts higher or +0.19% at 24289.9
- German Dax up 322.97 pts or +2.14% at 15446.54, FTSE 100 up 127.06 pts or +1.72% at 7499.62, CAC 40 up 144.03 pts or +2.11% at 6981.1 and Euro Stoxx 50 up 92.12 pts or +2.26% at 4170.48.
- Dow Jones mini up 279 pts or +0.82% at 34462, S&P 500 mini up 50 pts or +1.15% at 4399.75, NASDAQ mini up 255.75 pts or +1.81% at 14400.
LEVELS UPDATE: Continental divergence in gas prices
- WTI Crude up $0.44 or +0.51% at $86.12
- Natural Gas (NYM) up $0.19 or +4.79% at $4.247
- Natural Gas (ICE Dutch TTF) down $2.09 or -2.23% at $91.2
- Gold spot down $1.58 or -0.09% at $1846.74
- Copper up $7.9 or +1.78% at $452.85
- Silver up $0.1 or +0.44% at $23.9164
- Platinum up $17.34 or +1.69% at $1046.58
| Date | GMT/Local | Impact | Flag | Country | Event |
| 26/01/2022 | 1200/0700 | ** |  | US | MBA Weekly Applications Index |
| 26/01/2022 | 1330/0830 | ** | | US | advance trade, advance business inventories |
| 26/01/2022 | 1500/1000 |  | CA | BOC Monetary Policy Report | |
| 26/01/2022 | 1500/1000 | *** | | US | new home sales |
| 26/01/2022 | 1530/1030 | ** | | US | DOE weekly crude oil stocks |
| 26/01/2022 | 1600/1100 | | CA | BOC Governor press conference after rate decision | |
| 26/01/2022 | 1630/1130 | ** | | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 26/01/2022 | 1630/1130 | * | | US | US Treasury Auction Result for Cash Management Bill |
| 26/01/2022 | 1900/1400 | *** | | US | FOMC Statement |
| 27/01/2022 | 0030/1130 | ** |  | AU | Trade price indexes |
| 27/01/2022 | 0700/0800 | * |  | DE | GFK Consumer Climate |
| 27/01/2022 | 1100/1100 | ** |  | UK | CBI Distributive Trades |
| 27/01/2022 | 1330/0830 | ** | | US | Jobless Claims |
| 27/01/2022 | 1330/0830 | ** | | US | durable goods new orders |
| 27/01/2022 | 1330/0830 | *** | | US | GDP (adv) |
| 27/01/2022 | 1330/0830 | ** | | US | WASDE Weekly Import/Export |
| 27/01/2022 | 1330/0830 | * | | CA | Payroll employment |
| 27/01/2022 | 1500/1000 | ** | | US | NAR pending home sales |
| 27/01/2022 | 1530/1030 | ** | | US | Natural Gas Stocks |
| 27/01/2022 | 1630/1130 | * | | US | US Bill 08 Week Treasury Auction Result |
| 27/01/2022 | 1630/1130 | ** | | US | US Bill 04 Week Treasury Auction Result |
| 27/01/2022 | 1800/1300 | ** | | US | US Treasury Auction Result for 7 Year Note |
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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