Animal Spirits Roar Back
Includes: CNY, CROC, CYB, DAUD, DEUR, DGBP, DJPY, DLBR, DRR, ERO, EUFX, EUO, FXA, FXB, FXC, FXCH, FXE, FXY, GBB, JYN, UAUD, UDN, UEUR, UGBP, UJPY, ULE, URR, USDU, UUP, YCL, YCS
Marc Chandler, Seeking Alpha
Jan. 9, 2020
· Oil prices unwound the earlier knee-jerk gains and were given an extra push by the unexpected build of US crude inventories, according to the EIA.
· Consumer prices steadied in China at the end of last year. December's CPI was unchanged from November's 4.5%.
· Germany reported a larger-than-expected 1.1% rise in November industrial output, the most in a year and a half.
· The light US economic calendar today keeps the focus on tomorrow's employment data.
Overview: The S&P 500 recovered from a 10-day low to reach a new record high, which set the tone for the Asia-Pacific and European markets today. The MSCI Asia Pacific Index jumped by the most in a month with the Nikkei's 2% advance leading the way. More broadly, the markets in Taiwan, South Korea, Hong Kong, India, and Thailand all rose more than 1%. Europe's Dow Jones Stoxx 600 was up a milder 0.5%, but its third successive advancing session has seen new record highs. US shares are trading firmer as well. Yields in the Asia-Pacific region were pushed higher by the backing up of yields seen in the US yesterday, but European yields are narrowly mixed, and the US 10-year is little changed near 1.87%. The dollar is building on yesterday's gains against the major currencies, but the risk-on mood is evident in the strength of the emerging market currencies. Except for Eastern and Central Europe, emerging market currencies are mostly higher, led by the nearly 1% rally in the South Korean won. The JPMorgan Emerging Market Currency Index is pushing higher and testing the 200-day moving average. Gold and oil staged big key reversals yesterday. After reaching a peak near $1611 yesterday, gold reversed lower and finished near $1556. Today it saw $1540 before stabilizing. February WTI reached $65.65 before plummeting to almost $59. Oil prices unwound the earlier knee-jerk gains and were given an extra push by the unexpected build of US crude inventories, according to the EIA. It is consolidating around $60 today.