Citibank 1/6: EU-US divergence - mind the gap(s)!
Citi analysts - #Europe is still struggling to recover from the Covid-19 pandemic, while the US is continuing to recover. Euro area real GDP has contracted by 0.7% QQ (-4.9% YY) in 4Q-20.
Citibank 2/6: Over the same period, US GDP has risen by 1.1% QQ (-2.4% YY). Citi analysts focus on 6 of the more salient aspects of the transatlantic divergence between the euro area & US & conclude the gap is unlikely to narrow any time soon & could even widen in the short-term.
Citibank 3/6: Transatlantic divergence - where are the gaps? – (1) Business Cycle — Euro area weakness is unlikely to end soon, with a challenging 2Q, perhaps extending into 3Q with narrowing only expected 12 months out; (2) Vaccinations — Europe lags US by 2 months.
Citibank 4/6: Optimistic (pessimistic) scenario suggest narrowing (widening) to 1.5 (2.5) months; (3) GDP trend — return to pre-crisis trend is more complicated for euro zone. Underperformance could become entrenched and output gap much larger; (4) Widening fiscal gap —
Citibank 5/6: from twice as large in 2020, US stimulus could be more than 3 times bigger than euro area in 2021; (5) US reflation vs #euroarea ‘low-flation’ — less scope to rebound in euro area due to smaller pent-up demand & Covid-driven distortions, no housing component in CPI,
Citibank 6/6: larger labor market slack and more subdued inflation expectations. Bottom Line - On ECB and Fed’s imputed short-end rate paths, investors are more optimistic about higher US yields, while uncertainty still reigns about possible next ECB steps.

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Francesc Riverola - FXStreet.com 🎗

Francesc Riverola - FXStreet.com 🎗 Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @Francesc_Forex

14 Apr
UBS 1/4: Don't expect the #volatility lull to last.
Wall Street’s most prominent gauge of investor anxiety, #VIX index of implied stock #volatility, closed at a fresh pandemic-era low near 16.7 last week. But we see reasons to expect periodic bouts of higher volatility near term
UBS 2/4: First, investors are likely to be torn between optimism over accelerating growth and worries over higher inflation. Second, optimism over the course of the pandemic is being tested by the spread of new variants of the virus.
UBS 3/4: Finally, we expect volatility to be driven by increased institutional and retail activity in the options market, along with the increased share of growth stocks in major indexes. However, investors can take advantage of this backdrop.
Read 4 tweets
14 Apr
ING Bank 1/5: Latest #eurozone production figures are weak, but the future looks bright
Industrial production in the eurozone is being held up by input shortages at the moment. This will lead to weaker growth in the first quarter, but underlying demand is strong and that makes us
ING Bank 2/5: upbeat about prospects for the bloc as it reopens later in the year.
February industrial production showed a decline of 1% compared to January. Production had fully recovered to pre-pandemic levels at the start of the year but dipped back later.
ING Bank 3/5: The decline will mean that the manufacturing contribution to GDP may disappoint a bit given the strong performance seen in the fourth quarter, adding to our view of another GDP contraction in 1Q before the economic rebound starts.
Read 5 tweets
14 Apr
Deutsche Bank 1/4: Talking of #vaccines, while we went into yesterday expecting that the CPI reading would dominate attention, the bigger news story instead turned out to be on the pandemic, as the US authorities recommended that the Johnson & Johnson vaccine be paused
Deutsche Bank 2/4: after there were 6 reported cases of a severe blood clot. Though this was among a total number of over 6.8 million who’d received the vaccine in the US, all of the cases happened in women aged between 18 and 48, with symptoms occurring 6-13d after #vaccination
Deutsche Bank 3/4: We should hear more on the issue shortly, with the CDC saying that they’d convene a meeting of the Advisory Committee on Immunization Practices today to look further at the cases. Nevertheless, the move is already having ramifications elsewhere,
Read 4 tweets
14 Apr
OCBC Bank 1/4: Overall, the #DXY index was left south of the 92.00 support. This leaves the near-term technical picture bearish for the broad USD, with the immediate target at the 55-day MA (91.52). This round of USD weakness is EUR- and JPY-led, rather than cyclicals-led as in
OCBC 2/4: the case in early-Feb & mid-March. Overlay this with resurgence of confirmed cases in places like India & Canada, & the J&J vaccine set-back, this lack of reaction from the cyclicals may be a reflection that the vaccination / recovery positives have been fully priced in
OCBC Bank 3/4: Large short positions for the likes of AUD and CAD were pared among the non-commercial accounts were pared in 2H 2020, but there is no sign of net longs building this year. Overall, there is room to question the structural global recovery / weak USD theme.
Read 4 tweets
14 Apr
Forex Live 1/5: FX #options expiries for 14 Apr 10am NY cut
There are some sizable ones layered for #EURUSD closer towards 1.1900 but also near current levels, even for tomorrow, so that might attract price action with key resist seen closer towards 1.1990-00 region at the moment ImageImage
Forex Live 2/5: That said, the dollar looks vulnerable across the board with 10-year #Treasury yields also sitting on the cusp of a soft bottom closer to 1.60%, so there's that to consider.

Going over to #USDJPY, that has seen the pair fall below 109.00 - where there are some
Forex Live 3/5: modest and chunky expiries seen this week.
Technically speaking, the break below 109.00 also sees the pair likely to push lower to test the 23 March low @ 108.40 so this just adds to the conviction.

All of that ties together with general dollar sentiment and how
Read 5 tweets
14 Apr
Citibank 1/7: US #CPI strong on transitory components & solid shelter prices
Citi analysts take – the strong increase in March US core CPI released overnight is in line with upside surprises expected in the coming months as a number of components normalize.
Citibank 2/7: Key shelter prices in CPI however show signs of potential earlier-than-expected firming with another solid increase in owners’ equivalent rent (OER), the key shelter price component of consumer price inflation and the largest share of CPI.
Citibank 3/7: Overall, US core CPI in March rises 0.339%MoM, stronger than consensus for 0.2%. Meanwhile core CPI YoY rises to 1.6% and headline CPI gains 0.6%MoM on strength in energy (+5%) and food (up a modest 0.1%).
Read 7 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!