Marc Chandler has returned from the Holidays with both today's headline post and a look-back/look-ahead at 2024.
From Bannockburn Global Forex, Marc to Market:
Overview: The US dollar begins the new year on a firm note. It is recovering against nearly all the G10 and emerging market currencies today after depreciating in the holiday-thin markets over the past couple of weeks. Japanese markets are on holiday until Thursday. The yen and Swiss franc are the poorest performers among the G10 currencies. Among emerging market currencies, the Mexican peso, Hungarian forint, and South African rand are bucking the trend to post minor gains against the greenback. The Chinese yuan is off by about 0.5% for its biggest loss in at least six months.
Equities are mixed while bonds have sold off. In Asia Pacific, Hong Kong and mainland Chinese equities tumbled by 1.3%-1.5% to lead the regional decline, but Korea and Australia, and a handful of other smaller markets rose. Europe's Stoxx 600 finished last year on its highs and is trading with a slightly firmer bias today. It pushed above the 480-level for the first time since January 2022. US index futures are nursing small losses. Ten-year benchmark yields are jumping higher today. Eurozone yields are 7-9 bp higher, while the yield of the 10-year Gilt is up a dozen basis points. The 10-year US Treasury yield is 6.5 bp higher to almost 3.95%. If sustained, this would be the largest rise in the US 10-year yield since the last jobs report on December 8. Geopolitics and the heightened tension in Red Sea are seeing gold buck the pressure of a stronger US dollar and higher yields and is trading with a firmer bias near $2075. It settled near $2063. February WTI has also come back bid after falling by nearly $4 a barrel in the last three session of 2023. It is trading around $1.75 higher near $73.40.
Asia Pacific
Tokyo's markets were closed today and tomorrow for national holidays as the country is dealing with aftermath of a powerful and deadly earthquake that struck yesterday. Thursday sees the final Japanese December manufacturing PMI will reflect a sector that remains challenged. The preliminary reading of 47.7 matches the low for the year. November industrial output, reported last week, fell by 0.9% Industrial production contracted at an annualized rate of about 2.8% in Q3. The Bank of Japan reduced the number of bond-buying operations for the long end of yield curve. It also reduced lower end of range of 1-10-year JGBs it will purchase. Governor Ueda seems to be preparing the market for a hike in April, the start of the new fiscal year, the end of the government electric and subsidies (estimated to have lowered headline CPI by around 0.5%), and the conclusion of the spring wage round. The swaps market anticipates that several G10 central banks will cut rates in March or April.
There are three things to note in China. First, the December PMI was reported. The contraction in the manufacturing sector deepened (49.0 vs. 49.4 in November). It is the third consecutive decline and matches the lowest reading since May. The non-manufacturing PMI (services and construction) firmed slightly to 50.4 from 50.2. The composite PMI slipped to 50.3 from 50.4, which is the lowest 2024 [?] reading....
....MUCH MORE
And: "January 2024 Monthly"
Highly recommended overview, he is a pro's pro. And often, a prose pro.
