19 Dec 2014
Risk appetite improves as markets digest FOMC – TDS
FXStreet (Barcelona) - Annette Beacher, Head of Asia-Pacific Research at TD Securities, notes that the risk appetite improved over as markets digested FOMC’s motives, with NZD outperforming in the Asia-Pac FX Space.
Key Quotes
“The appetite for risk improved overnight with a bit more digestion of the FOMC’s motives, boosting equities and longer-dated Treasury yields in particular.”
“In Asia-Pac, local tier 1 data flow was absent, but there was chatter about the sharp moves in CNY and short market rates. The spread between CNY spot and daily fix (.106) surpassed the April blowout, while SHIBOR jumped from 3.13% to 3.606% and the 7d repo y/day jumped from 3.78% to 4.4% and again today to 5.94% (back to January levels).”
“We have to note that this year-end cash demand was also seen last year (as banks meet reserve requirements by year end). The NBS released revised Chinese GDP figures, increasing the level of 2013 GDP by 3.4% as hinted a few days ago, but as only 2013 has been released there is limited information in this announcement.”
“After the strong U.S. lead, Asia-Pac equities are up at least 1% if not 2% by lunchtime trade (Shanghai –0.5% with chatter that perhaps the PBoC won’t be cutting RRRs in the near term).”
“In FX space NZD is the outperformer (we doubt strong migration is the reason, perhaps one of few central banks with a tightening bias?) followed by AUD and CAD while JPY and NOK are the underperformers.”
“ACGB yields are +6+7bp higher following the Treasury selloff to be net flat-3bp higher over the week, while NZGB yields are also ~7bp higher across the curve, while over the week the belly underperformed to reflect the explicit RBNZ tightening bias”
Key Quotes
“The appetite for risk improved overnight with a bit more digestion of the FOMC’s motives, boosting equities and longer-dated Treasury yields in particular.”
“In Asia-Pac, local tier 1 data flow was absent, but there was chatter about the sharp moves in CNY and short market rates. The spread between CNY spot and daily fix (.106) surpassed the April blowout, while SHIBOR jumped from 3.13% to 3.606% and the 7d repo y/day jumped from 3.78% to 4.4% and again today to 5.94% (back to January levels).”
“We have to note that this year-end cash demand was also seen last year (as banks meet reserve requirements by year end). The NBS released revised Chinese GDP figures, increasing the level of 2013 GDP by 3.4% as hinted a few days ago, but as only 2013 has been released there is limited information in this announcement.”
“After the strong U.S. lead, Asia-Pac equities are up at least 1% if not 2% by lunchtime trade (Shanghai –0.5% with chatter that perhaps the PBoC won’t be cutting RRRs in the near term).”
“In FX space NZD is the outperformer (we doubt strong migration is the reason, perhaps one of few central banks with a tightening bias?) followed by AUD and CAD while JPY and NOK are the underperformers.”
“ACGB yields are +6+7bp higher following the Treasury selloff to be net flat-3bp higher over the week, while NZGB yields are also ~7bp higher across the curve, while over the week the belly underperformed to reflect the explicit RBNZ tightening bias”