Daily Market Outlook, July 22, 2024

Munnelly’s Macro Minute…

“Biden Withdraws From Another White House Bid, Backing Harris”

Following Joe Biden's withdrawal from the re-election race and his endorsement of Vice President Kamala Harris, the US Dollar depreciated while Treasuries experienced an increase.

In an effort to stimulate economic growth, the People's Bank of China decided to lower a short-term rate for the first time in over a year, resulting in a two basis point decrease in the yield on China's 10-year sovereign note. Foreign ownership in China's second-largest bond market reached a record high of 4.3 trillion yuan ($591 billion) in a single month, marking the tenth consecutive month of increased investment by international investors.Amidst a downturn in the technology sector, Chinese stocks declined, contributing to overall regional losses spanning from Japan to Australia. The decline in Taiwan Semiconductor Manufacturing reached 3.3%.

This week, financial markets will be influenced by the U.S. Federal Reserve's preferred inflation gauge, flash PMIs for major economies, U.S. second-quarter earnings, and the Bank of Canada's rate decision. The Fed will enter a blackout period ahead of its July 30-31 meeting, leading to a lull in major central bank speeches, while the global data calendar is relatively light. In the U.S., the focus will be on Friday's core PCE price index as the Fed considers cutting interest rates due to improved inflation trajectory. Other releases include existing home sales, July S&P Global flash PMIs, trade data and new home sales, durable goods and advance Q2 GDP, personal consumption, and the final reading of the University of Michigan July consumer sentiment and inflation expectations. In Europe, key releases include eurozone flash July consumer confidence and PMIs, German retail sales, and the Ifo survey. The UK's only top-tier data is flash July PMIs. Japan will publish flash PMIs and Tokyo July CPI. The Bank of Canada will meet on Wednesday, with markets pricing in a 92% probability of a 25 basis-point rate cut following a slower-than-expected rise in consumer prices in June..

Overnight Newswire Updates of Note

Reeves Hints At Above-inflation Public Sector Pay Rise
UK Ministers Point To Tough Autumn Budget And Possible Tax Rises
Biden Exits Race, Endorses Harris As She Shores Up Support
Leading Democratic Donors Swing Behind Kamala Harris
China Shows Few Signs Of Tilting Economy Toward Consumers In New Plan
China’s Land Concession Revenue Vulnerable To Downturn
China Surprises With Cuts To Key Rates To Support Economy
Imports Plunge, New Zealand Records $669 Million Goods Trade Surplus For June
Oil Rises As Biden Quits US Race, Blazes Threaten Canadian Wells
Nvidia Preparing Version Of New Flaghip AI Chip For Chinese Market
Asia Stocks Skid As China Trims Rates; Biden Bows Out
VC Firm Lanchi Bets On China AI, Hong Kong Potential After Parting Ways With BlueRun

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

FX Options Expiries For 10am New York Cut

(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

EUR/USD: 1.0845-50 (1.1BLN), 1.0900 (496M) 1.0925 (616M), 1.0950 (918M)
EUR/CHF: 0.9650 (272M), 0.9700-10 (1.1BLN)
GBP/USD: 1.2900 (200M), 1.2930-40 (1.2BLN)
EUR/GBP: 0.8375 (480M), 0.8415 (400M), 0.8450 (432M), 0.8465-75 (925M)
AUD/USD: 0.6650-55 (757M), 0.6700 (1BLN). NZD/USD: 0.6095 (330M)
USD/CAD: 1.3575 (1.7BLN), 1.3700-10 (807M), 1.3805 (391M)
USD/JPY: 156.00 (531M), 157.30 (415M), 158.00 (2.6BLN), 158.45-50 (789M)

CFTC Data As Of 16/7/24

Equity fund managers raise S&P 500 CME net long position by 19,908 contracts to 997,340
Equity fund speculators increase S&P 500 CME net short position by 28,517 contracts to 370,142
Japanese yen net short position is 151,072 contracts
British pound net long position is 132,902 contracts
Euro net long position is 24,749 contracts
Swiss franc posts net short position of -49,793 contracts
Bitcoin net short position is -579 contracts