Thread by @MacroTechnicals

MT GLOBAL MARKETS Momentum & Sentiment as of 01Nov19 wk44

1/n

• The FED taketh and giveth
• Macro picture improved
• Technicals remain strong
• Global breakouts
• Mkt breadth robust
• Vola get slammed
• credit spreads tight
• China deal hope
• RiskON continued 4th wk

2/n 4 weeks RiskOn basically means Oct month price performance :

• solid stock & sector performance
• Cable rebound on BREXIT delay
• core bond market profit taking after Yield-FOMO
• CDS Indices risk premia tightened
• global dovish CB's flooding again mkt with liquidity

3/n YTD update as of wk44

4/n technicals are currently without doubt impressive, momentum and trend scores are on fire, and a large batch of local stock indices, $ ETFs, US sectors hitting new 52wk high.

5/n US as <the> leading market had a huge and positive macro week.

• FED cut 3rd time + liquidity
• NFP despite GM strike very strong
• Manufacturing PMI hit 51.3 6M high
• ISM 48.3 still bad though

6/n FED delivered the 94% (?) probability expected 3rd 25bp cut. And yes, I made a joke 2min b4 announcement "no cut", some took it too serious and unfollowed me LOLZ.

anyways, Dec FF Futs stable now

7/n the currently rolling TOMO Repo facilities hit 73bln O/N and 157bln terms, hence a total 230bln. Call it what it is, but FED is doing everything , 3rd cut, Repos, T-Bills. What's next ?

8/n given the 230bln rolling repos, and the new ongoing T-Bill purchases, OF COURSE they cut the target range . Balance sheet regardless of the content is back to 4Trln.

The FED taketh and the FED giveth.

From too hawkish, plus Tariff uncertainty, US$ shortage... u-turn 180.

9/n Unemployment still very low at 3.6%, but tiny uptick from previously 3.5%. Doesn't mean anything yet, but perhaps in context to previous roll overs of US2Y, FED rates and JOLTS (lagging tho), who knows.

10/n NFP was very strong. Despite GM strike very solid and much better than expected. Also huge positive revisions last 2 months.

without wanting to sound negative,just a loud thought: NFP Y/Y growth rate keeps falling, from 1.9% to 1.4% now.

+1.26% already makes NFP negative

11/n PMI hit 51.3, 6M high. Different survey, different measurement (skewed to new orders). Anyways, on Y/Y basis also a rebound. SPX Y/Y performance is kind of distorted to the Q4 2018 -20% sell-off.

12/n putting new ISM, UE rate, credit spreads, yieldcurve (I know, a lot of people say blabla, but bond yields look into the next 12+ mths future, not next week), here is the "tongue-in-cheek" Macro Risk Indicator. Small bounce to 80+. It's a long process. SPX technicals strong

13/n CDX credits indices are good. Didn't make new lows, but solid

14/n and SPX has indeed now more or less caught up vs CDX Y/Y basis.

15/ UK PMI also rebounded to 6M high , in tandem with hard BREXIT off the table, FED, China talks improvements and ATH in SPX. Rebound visualised here:

16/ Global PMI data incomplete, but so far a lot of improvement. US/UK/CA rebound,China 2.5Y H, IN/ID/JP/NL/Sweden very weak though.

CB acting accordingly, another round of cuts (US/BR/HK).

Average DM CB rate 0.39, 10Y at 0.56 = cheap funding

Candy for markets

17/n VIX however is getting close to complacency levels, obviously accompanied with new ATH hitting the news.

also steep contango curve

18/n new ECB captain, here we go as expected:

https://twitter.com/financialtimes/status/1189582776401616901?s=21

19/n I leave you now in peace.

cheers.

@threadreaderapp unroll pls.