Morning Update – 23/11/15 – 07:45:28

November 23, 2015 by Arjun Lakhanpal

Morning all.. Wall St closed firmer again with the S&P up 0.38% and Asia has started the week on a positive note with the Nikkei up marginally but HK was lower. It has been a quiet Asian session but the dollar extended gains made on Friday in the US with the EUR touching 1.0600. Meanwhile, in the bond space US 2y yields (+2.5bps) closed at 0.917% and above 0.90% for the first time this year as the Fed commentary on Friday all hinted towards a December liftoff bias. In stark contrast, 2y Bund yields were down another basis point on Friday and extending their move deeper into negative territory at -0.396%. That spread between the two now has gone above 130bps which is the most 2y Treasuries have traded above similar maturity Bunds this year and in fact the most since August 2006. This is driving EUR lower and the Dollar higher analysts say. With regards to ECB President Draghi’s speech on Friday, markets latched onto his comment that ‘if we decide that the current trajectory of our policy is not sufficient to achieve our objective, we will do what we must to raise inflation as quickly as possible’, saying that this ‘is what our price-stability mandate requires of us’. Commodity markets have kick started the week on the back foot. Oil in particular has given up Friday’s gains and more, with WTI down -2.12% as the dollaar rises. Natural Gas is down another 3% also while there’s broad based losses across much of the metals space. Lower oil taking USDCAD to new recent highs. Today we get PMI data for France, Germany and the EU; from the US we have Manufacturing PMI and Existing Home Sales.. Good luck.