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Breakfast Bites - Wed Sep 13, 2023

Rise and shine everyone

The big news today is the US CPI numbers. This is the last major data release before the Fed rate decision next week. Estimates are for Headline CPI to increase from 3.2% to 3.6% while Core CPI decreases from 4.7% to 4.3%. We expect that rent and airfares (transportation) will continue to remain elevated. We’re likely to see some decline used car prices and we will be keeping an eye on the energy and food numbers.

The other big news is oil with WTI crossing $89/bbl. After OPEC’s report showed that global oil inventories is expected to drop c. 3.3 million barrels a day in the next three months. It’s likely that we will see upward momentum in oil prices over the next few weeks at least. There are estimates that with the new spending plans in place, Saudi Arabia may be targeting a price of around $100/bbl for Brent Crude.

US Equity Futures are trading lower this morning. Gold remains flat, Bitcoin higher alongside the US Dollar Index. Yields are higher across the curve with the Yield Curve at -0.73%

Asia and Australia

  • Asian equities trading slightly lower Wednesday in a quiet session. Japan benchmarks to close mixed with the Nikkei slightly lower but Topix flat. Australia finished lower led by tech names. Greater China mixed with the Hang Seng flat but mainland markets notably lower.

  • Reuters Tankan showed Japan manufacturer confidence fell by most in eight months while services sector sentiment also dropped sharply with firms citing elevated input costs and soft demand.

  • China says it is not barring iPhone purchases while flags security incidents.

  • Hong Kong-listed automakers down sharply in late trade Wednesday after European Commission President Ursula von der Leyen said Brussels will launch anti-subsidy investigation into Chinese EVs that are "distorting" EU market.

  • Latest Reuters consensus poll found 2023 GDP growth expected at 5.0%, down from 5.5% in the July survey, with estimates ranging between 4.5%~5.5%.

  • Offshore yuan's borrowing costs in Hong Kong surged across curve this week as China ramps up fights against yuan bears after currency slumped toward record low. PBOC delivered a strong verbal warning against speculation Monday.

Europe, Middle East, Africa

  • European equity markets lower. Retail sector under pressure, along with industrial goods/services, utilities and construction. Banks the only sector in positive territory.

  • UK GDP data came in lower than expected. GDP slipped by -0.5% MoM following a +0.5% gain in June. Economists had expected a contraction of -0.2%. The GBP declined on this news.

  • Reuters sources said the ECB expects inflation to remain above 3%, which has reinforced expectations the Governing Council is likely to vote for another rate increase on Thursday.

  • Eurozone industrial production missed expectations, down 1.1% MoM versus forecast for 0.7% fall and prior revised a fraction lower to 0.4% increase from 0.5% initially reported.

  • Credit Suisse still sees recession likely, citing PMIs, yield curve, real money supply and household lending.

  • BofA's latest European fund manager survey for September showed that while a majority of investors see European equities falling in the coming months due to monetary tightening, fading bets that the economy will be tipped into recession over the next year have led an increasing number to take a more optimistic view on stocks in the medium term.

The Americas

  • Apple held its widely anticipated product event on Tuesday during which it unveiled its new line up for the iPhone 15 (15, 15 Plus, Pro, Pro Max), Apple Watch (Series 9, Ultra 2), and AirPods. The iPhone 15 Pro Max was increased by $100. The reaction was lukewarm with the stock price seeing a “sell the news” reaction.

  • Boeing Company delivered 35 aircraft in August, down from the 43 planes it had in July and 60 in June. The 737 MAX jets are grappling with supplier-related issues with Spirit Aerosystems Holdings, Inc, which has called on Boeing to share a more significant portion of the financial strain brought about by inflation, deeming its contracts currently 'unsustainable.’

  • CBRE, in its 2023 US Real Estate Market Outlook Midyear Review, pushes back its call for recession to late '23 and into 2024. Anticipates cap rate stabilization by early 2024, though office will take until mid-year '24.

  • American Airlines issues revised guidance - sees 3Q adj EPS at about 20c to 30c (Previously: 85c to 95c).


(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)


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