Futures
US Equity Futures Up on Friday; S&P 500 Heading for Best Month Since February
2024-11-29
US equity futures witnessed a rise on Friday, setting the stage for a promising trading start. The S&P 500 is on track to achieve its best month since February. Futures linked to the index indicated modest gains, following a remarkable 5% increase in November and a staggering 26% surge year-to-date. This upward trajectory was driven by the outstanding performances of tech giants and the inflow of international funds.

Yen's Surge and BOJ's Anticipated Policy Tightening

After Tokyo's inflation rate data came out higher than forecasts one month ago, the yen climbed to 151 per dollar. The annual average consumer inflation rate maintained pressures at an above-forecast level when core inflation, which excluded fresh food and energy prices, was taken into account. This fueled expectations of an early monetary policy tightening by the Bank of Japan (BOJ). Market prices suggest a 60 percent probability of a 25 bps rate hike when the BOJ policymakers meet in December, which could bring a significant policy shift.

International Market Dynamics

European shares remained relatively flat, while mining shares showed signs of advancement. Investors are awaiting the US Federal Reserve's decision and indications that Beijing is willing to boost credit growth. In thin post-Thanksgiving trade, US Treasury yields fell as the dollar faced its worst week in three months. This was in line with the market's anticipation of the Fed's policy switch to a cut.

Asian Market Complexities

Asian markets presented a somewhat intricate picture. Countries like Japan and southern Asian nations were on the list. Chinese equities rose as investors pinned their hopes on policy easing. However, Japan and South Korea experienced declines. South Korea's interest rate cut led to it losing ground. Investors are continuously monitoring impending core inflation reports and the next key milestones of global monetary authorities in this constantly evolving macroeconomic landscape.
Asia Market Update: CN Down, Ex-China Equities Rise with Flat Currencies
2024-11-22
In this comprehensive Asia market update, we delve into the various economic movements and events shaping the region and beyond. From the performance of different asset classes to key policy announcements and geopolitical developments, this article provides a detailed analysis.

Uncover the Hidden Dynamics of Asia's Market

Japanese National CPI and Prelim PMIs

The Japanese National CPI for October came in mostly in line, with all three figures comfortably above the BOJ target of 2.0%. Meanwhile, Japan's prelim PMIs showed Manufacturing logging its 5th straight contraction while Services returned to expansion after a one-month contraction. The 10-year JGB yield briefly touched 1.10% (the first time since early July) but dipped back 2 bps to 1.08% during the session. This provides valuable insights into the Japanese economic landscape and its implications for global markets.

The Bank of Japan's (BOJ) announcement related to outright bond buying operations in different timeframes was inline with prior purchases. Additionally, the terminal rate seen at 1.00% according to a financial press poll of economists gives an indication of the central bank's stance.

Australia's Prelim Manufacturing and Services

Australia's prelim Nov Manufacturing saw a 10th straight contraction, and Services also dipped into contraction for the first time in 10 months. This indicates a challenging period for the Australian economy and highlights the need for careful monitoring and policy adjustments.

The Australia bond auction saw just 2.04%, 4 bps below the market yield of 2.08% and towards record lows of ~2.00%. The PBOC also set the Yuan stronger by 555 pips over the estimate, while the offshore Yuan held the 7.25 handle. Earlier, a China state newspaper said the Yuan “may gain strength” as the strength of the USD ‘wanes’. These currency movements have significant implications for trade and investment.

China's Economic Indicators and State Policies

The China 10-year bond auction result showed a yield of 2.0400%, 4 bps below the prior yield. The state newspaper's statement about the Yuan's potential strength and the Vice Commerce Min Wang's comment on China's foreign trade maintaining a “stable and sound development trend” provide insights into the Chinese economic outlook and policy directions.

China's Guangzhou city's decision to eliminate the difference between ordinary and non-ordinary housing from Dec 1st is another significant development. The PCA's report on China Nov Preliminary Retail Passenger Vehicle Sales M/M showing a +15.4% increase compared to +7.2% prior also indicates positive consumer sentiment. Moreover, the MOFCOM's move to increase financing support for foreign firms and trade firms is likely to have a positive impact on economic growth.

Adani Group and US Federal Charges

Following group losses of ~20% yesterday on the US Federal charges of bribery against its Founder and Chair, Adani Enterprises dropped -6% with group stocks down a further -3% to -6% in pre-market trading. Adani Green Energy and Adani Energy Solutions also saw a -10% decline. This incident highlights the challenges faced by companies in the face of regulatory actions and market uncertainties.

US Equity Futures and Other Economic Data

US equity FUTs were -0.1% during the Asia session. In North America, various economic indicators showed mixed results. The Initial jobless claims were 213K, the lowest since Apr, while continuing claims were 1.908M, close to a 1-year high. The Nov Philadelphia Fed business outlook was -5.5, lower than the expected +8.0. The Oct existing home sales were 3.96M, in line with expectations. The Oct leading index was -0.4%, slightly lower than the expected -0.3%. These data points provide a snapshot of the US economic health and its potential impact on global markets.

The Weekly EIA Natural Gas inventories showed a -3 BCF reading, the first negative since early Sept, indicating a potential shift in the energy market. Matt Gaetz's withdrawal from consideration as AG is another significant event in the US political and economic landscape.

European Economic Developments

In Europe, the Nov GfK Consumer Confidence in the UK was -18, slightly better than the expected -22. The French-German 10-year yield spread rose to a one-month high amid the French budget saga. The ECB's Patsalides (Cyprus, voter) emphasized the need for a gradual approach to rate cuts. The BOE Dep Gov Ramsden noted that inflation is close to target while service inflation remains quite high. The South Africa central bank (SARB) cut interest rates by 25 bps to 7.75% as expected. These developments have implications for the European economic recovery and monetary policy.

The ECB's Holzmann (Austria) stated that warnings of undershooting 2% aren't warranted and that a December rate cut is the likeliest outcome but not certain. The BOE's Mann (dissenter) advocated for holding rates for longer to evaluate persistence. The Eurozone nov advance consumer confidence was -13.7, lower than the expected -12.4. The Spanish Parliament's approval of a new fiscal package is another important event in the European context.

Levels and Market Movements

As of 00:20 ET, the Nikkei 225 was +1.0%, the ASX 200 was +0.9, the Hang Seng was -1.4%, and the Shanghai Composite was -1.5%. The Kospi was +1.1%. Equity S&P500 Futures were -0.1%, the Nasdaq100 was -0.1%, the Dax was +0.2%, and the FTSE100 was +0.1%. In the currency markets, the EUR was at 1.0465-1.0479, the JPY was at 153.97 -154.59, the AUD was at 0.6488-0.6522, and the NZD was at 0.5829-0.5861. Gold was +0.6% at $2,689/oz, Crude Oil was flat at $70.11/brl, and Copper was -0.7% at $4.0825/lb. These levels and market movements reflect the complex interplay of various factors in the global economy.

Looking ahead, with events such as Fri Nov 22nd (Fri eve UK Retail Sales, DE & US Nov Flash PMIs) on the horizon, the Asia market is set to continue its dynamic journey. Stay tuned for more updates and insights.
See More
Turkish Authorities Act to Prevent Counterfeit Dollar Circulation
2024-11-28
Turkish authorities have been actively engaged in efforts to combat the circulation of counterfeit U.S. dollars. This has led to a series of actions aimed at preventing any potential damage to the financial system. The central bank, in coordination with judicial authorities, is taking significant steps to address this issue.

Central Bank's Response

The central bank of Turkey has been working diligently to handle the counterfeiting problem. It has shared a report and guidance with lenders after examining the fake U.S. banknotes. By doing so, they are alerting the banking sector and providing necessary information to combat this issue. Additionally, they have issued statements emphasizing the importance of coordinated action with relevant judicial authorities.

According to a written statement from the Central Bank of the Republic of Türkiye (CBRT), counterfeit banknotes that have been in the news due to the increase in their circulation were sent to the bank by judicial authorities for an expert report. The expert reports on these counterfeit banknotes were then shared with judicial authorities as well as the Banks Association of Türkiye and the Participation Banks Association of Türkiye. This helps in creating a unified front against counterfeiting.

Furthermore, the CBRT has provided necessary guidance to caution against counterfeiting in technological infrastructure. This shows their commitment to staying ahead of the curve and ensuring the security of the financial system.

Impact on Banks and Currency Exchanges

Several banking sources have reported that several foreign exchange offices and banks are no longer accepting some U.S. dollars. This is due to concerns over the circulation of counterfeit currency. Although the exact amount of counterfeit currency in circulation is unclear, the situation has led to temporary disruptions in transactions.

Some $50 bills and $100 bills are suspected of being counterfeit and are not currently detected by money-counting machines. This poses a significant challenge as it can lead to incorrect transactions and potential losses for both banks and customers. The Turkish Banking Association (TBB) is taking steps to address this issue by checking and updating money-counting machines and ATMs to halt the further circulation of counterfeit bills.

A source with knowledge of the matter has stated that a planned rapid system-wide update to money-counting machines will make detection possible. This is an important step in ensuring the integrity of the currency and preventing counterfeiting from going undetected.

Investigation and Allegations

Earlier in the day, local media reported that the official investigation by the Istanbul Chief Public Prosecutor’s Office was launched upon the claim that counterfeit dollars printed abroad had been put on the market. The Istanbul Chief Public Prosecutor’s Office Anti-Smuggling, Narcotics and Economic Crimes Investigation Bureau took action following allegations that fake $50 and $100 bills printed abroad were being put into circulation in Istanbul and that some exchange offices in the Grand Bazaar had stopped accepting dollars.

Money-counting machines and ATMs with outdated software reportedly failed to detect the counterfeit currency, prompting a temporary suspension of transactions involving $50 and older $100 bills at currency exchange offices. The fake bills have reportedly originated from the Middle East, Asia, and the Balkans. However, a report by the private broadcaster Bloomberg HT suggested that the fake dollar banknotes are being smuggled into Türkiye from the southeastern border, with estimates suggesting that the total amount could exceed $1 billion.

See More