Here is your market roundup:

To kick-off the week, PboC (Bank of China) announced a few hours ago a cut of its REPO interest rate by 20bps to 2.20% from 2.40%, while injecting 50 billion Yuan into the system for the first time in almost 1 month.

On Friday, the FED announced that it will buy 350 billion USD of Treasuries this week before launching the QE infinity, the CB had already bought 500 of the 750 billion announced in its previous programme in just a few days.

Its balance sheet is currently at historic highs (5.25 trillion USD) and equivalent to roughly 25% of USA GDP. Some analysts believe it will soon reach 9 – 10 trillion.

The MBS buying programme, while lowering rates in the mortgage markets, is bursting the HEDGES built by mortgages bankers (buying swaps for protecting against the rise of rates), apparently causing a wave of margin calls.

One of the well-known causes of the US OUTPERFORMANCE during last years has been Corporate BUYBACK programmes propelled by Trump tax cuts for those repatriating off-shore capital: GS warns that during last two weeks, 50 companies have suspended these programs for a value of around 190 billion USD.

As a short consideration about INDICES, while several of them look like they have broken the steepest downtrend -from DAX to NASDAQ passing through NIKKEI- some of them have still not joined the club and -especially and very importantly- the SP500. This keeps us still cautious.

GBP still doing great after the +2.32% ag USD on Friday and the 1.42% appreciation against EUR. DXY lost almost 1% on the 27-03 and now is trading around 98.50 from 103 a few days ago: it’s showing very high volatility during last month. AUD still doing good (0.6145 now from 0.58 on last Monday) and YEN still looks preferable to CHF as a safe-haven. Emerging Markets Currencies (MXN, TRY, ZAR for example) still battered.

COMMODITIES

Oil CL  down another 5.35% to 20.6$ per barrel but – as good news – the future curve has NEVER been so positively inclined, with the OCT20 trading at 32$. XAU still consolidating in the 1610$ area as PALLADIUM is stuck in the 2250$ area.

Have a great Monday ahead.


By: Marco Turatti

Technical Analyst

TIO Staff
Author

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