Market Talk- January 23, 2018

Asian markets responded better than US cash did upon the news of settlement between the US House of Representatives and the Senate. The BOJ keeps rates unchanged certainly eased some concerns, but even that news did not spur too much reaction with the Yen/USD exchange rate. The Nikkei closed over the 24k level and is well on its way to the next psychological 25k mark. The BOJ sentiment and rhetoric appeared to talk-down any move in policy and even alluded to extending it further. It does not appear they intend to do more but at the same time is doubtful of any move in current theme. The Nikkei took this will renewed enthusiasm and added 1.3% on the day, taking this to levels not seen since November 1991. In China both the Shanghai and Hang Seng both returned nearly 1.5% each with financials and housing still setting the pace. ASX performed (+0.7%) as precious commodities made ground but the A$ lost around -0.5%.

The DAX appeared to set the pace in Europe with a 100 point rally and a +0.7% increase. This has set fresh record highs for the German index just exceeding last Novembers level. Tech and financials appeared to be the trend setters for today with automakers the drag. Despite Carrefour declaring it’s new streamline plan and gaining over 3% it was not enough to provide a positive day for the CAC after Miners and Industrials dragged the index lower (-0.12%). The peripheral markets had a mixed response to the mixed core with FTSE MiB closing down -0.22% and IBEX closing +0.2% for the day. In a day when core was undecided it was also the case in the Bond market. The core US/Germany spread tightened 2bp but we continue to see Greece tighten as the market expect the ECB to buy more paper. BITCOIN has played within its usual 10% price swing, with mornings losses recovered in afternoon trading. Demand continues to build for Emerging Market debt and seems to be being matched with more and more paper coming to market. Talk now is that Oman is considering raising an additional $2bn after its recent $6.5bn offering.

In the US it’s the NASDAQ that sets the pace and in that its Netflix the hot topic. Netflix shares surged over 10% on better subscriptions than expected, helping the index to a record level and +0.65% return on the day. There will be an evening vote tonight in the Senate to vote the nomination of Jerome Powell as the next FED Chair. The NASDAQ maintained its advance eventually closing up +0.75% for the day. The DOW was in and out of positive territory, eventually closing small positive.

Japan 0.07%, US 2’s closed 2.04% (-2bp), 10’s 2.63% (-3bp), 30’s 2.92% (-1bp), Bunds 0.56% (u/c), France 0.84% (u/c), Italy 1.88% (-3bp), Greece 3.69% (-10bp), Turkey 11.79% (u/c), Portugal 1.88% (-3bp), Spain 1.35% (-3bp), and Gilts 1.35% (-1bp).