TROUBLING BEHAVIOR

China Peg is Real

 

What Gold looks like when someone is liquidating

Last Few Days Have Been Unusual and bullish we thought

Sell signal on deck?

 

  

Technicals

Live only

 

Macro

Yesterday: China and Brexit

1- China may reconsider its “Made in China 2025” initiative as an apparent concession to the US 

2- while reports suggest it has bought 1.5-2.0 mln tons of soy is easing trade tension fears.

3- UK Prime Minister May survived a vote of confidence.  

4- Italy offers a 2.04% budget deficit to the EU.

Today:  Draghi

  1. Nearly everyone expects Draghi to confirm that asset purchases will end this month.
  2. The monetary policy setting remains extraordinarily accommodative and repeating the forward guidance that rates will not be lifted until after next summer comes at little cost.  The market has already largely pushed the hike from late 2019 into 2020.
  3. The new forecasts are likely to shave growth and inflation projections next year.  The 2020 forecasts are likely to be less impacted, but this is something to keep an eye on next year.  For the first time, the 2021 projection will be presented.
  4. The ECB’s risk assessment will likely remain balanced.  The improvement in the labor market and wages continue to be the source of optimism despite weaker than anticipated economic performance
  5. Many investors will be looking for insight into the reinvestment process.  This is mostly a technical discussion of how the maturing issues will be reinvested.  The ECB may introduce greater flexibility such as expanding the maximum period between when an issue matures and when the proceeds need to be reinvested.  There is much interest in whether the ECB will encourage an Operation Twist-type of approach where longer-term maturities would be emphasized.

US Data

Fed Futures:  the probability of a hike in Q1 19 has fallen to about a third from a half a month ago.

 

Counter Trade Day?

Short-term traders may do well  to fade the initial reaction of Draghi headlines on ideas that the ranges are likely to prevail ahead of the FOMC meeting next week.