From Marc to Market:
Overview: The largest bourses in the Asia Pacific region followed the US equity market lower, with the Nikkei posting its first loss in nine sessions. China, Hong Kong, and Australia moved lower as well. On the week, the MSCI Asia Pacific Index gained about 1% after rising 6.3% in the prior week. China's markets are the only ones in the region not to move higher this week. European shares are little changed today and are up a little more than 5% this week after gaining 7% in the previous week. US shares are firm. The S&P 500 brings a 0.8% gain this week into today's session. It was up 7.3% last week. The US 10-year Treasury yield of 0.88% is off four basis points this week, though steady today. European yields are a little softer today, and on the week, the core yields are off 3-4 bp, while the peripheral yields are off 4-8 bp. Of note, here too, China is moving in the opposite direction. Its benchmark 10-year yields rose three basis points this week to 3.25%. The dollar is mostly softer, but it is higher against all the major currencies this week, save the New Zealand dollar, where the market has unwound the likelihood of negative policy rates. Among emerging markets, the Turkish lira surged nearly 11.5% this week, as the new economics team and a perhaps chastened president spurred the dramatic short-covering rally. The JP Morgan Emerging Market Index is up about 0.5% this week after last week's 2.5% gain. Gold is hovering around $1880, off about 3.7% this week, and effectively giving back last week's gains to be little changed here in November. Crude oil is softer on the day, but the December WTI is still up about 9.5% this week after rising 3.8% last week. It is near $40.70 and settled October a little above $37.
Asia Pacific
The G20 meeting of finance minister and central bankers is to further progress on debt relief for the poorest countries. The measure of success is if China, which is the official largest creditor and is owed almost two-thirds of the debt payments this year by the poorest countries. After agreeing in principle to a framework last month, the hope is that China accepts a similar approach as the Paris Club (of creditor nations). The G20 seeks a standardized approach.
A combination of large money market operations maturing and speculation that the PBOC will begin unwinding emergency measures has roiled China's money market this week that had sent the overnight repo to its higher levels since January. Rates eased today after officials said that they would inject CNY160 bln into the banking system, the most since late September. On Monday, the PBOC will inject funds via the Medium-Term Lending Facility (MLF). Large operations are rolling off this month, and the size of the PBOC operation will shed light on Beijing's intent.
By executive order, the US prohibited investment in 20 Chinese firms controlled by the Chinese military. This seemed to weigh on the shares of the impacted companies today, but the entire market was heavy, as we noted. Separately, pending the judicial process, TikTok has been given a reprieve from being banned in the US....
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