Thu, 22nd June 2017

Anirudh Sethi Report


Archives of “April 7, 2017” Day

Russian PM: “US On Brink Of Military Clash With Russia”

In a statement on Friday morning, Russian Prime Minister Dmitry Medvedev said that the US missile strike violated not only international, and added that the attack “was on the brink of military clashes with Russia.”

“Instead of their much-publicized thesis about a joint fight with a common enemy, Islamic State [IS, formerly ISIS/ISIL], the Trump administration has proven that it will fiercely fight against the legal government of Syria,” Medvedev wrote on his Facebook page.

Ealier in the day, the Kremlin released a statement according to which “President Putin views the U.S. strikes on Syria as aggression against a sovereign state in violation of the norms of international law and on a made-up up pretext. This step by Washington will inflict major damage on U.S.-Russia ties.”

“President Putin views the U.S. strikes on Syria as aggression against a sovereign state in violation of the norms of international law and on a made-up up pretext,” said a Kremlin statement. “This step by Washington will inflict major damage on U.S.-Russia ties.”

Baker Hughes oil rig count rises for the 12 week in a row

Oil rigs up 10 to 672 from 662

Baker Hughes rig count for the current week shows another gain:
  • Oil rigs 672 from 662 last week.  Up 10
  • Gas rigs 165 vs 160 last week. Up 5.
  • Total rigs 839 vs 824 last week. Up 15 for the current week
The price of oil is up  $0.47 to $52.17. That is a gain of +0.93%. The high reached $52.94. The low $51.49.  Key support for oil is around the $51.00 level where the 100 day MA and the 50% of the move down from February high comes in.
The gains today are on the back of the geopolitical unrest from the US Syrian attacks. This week inventories was higher than expectations. Rigs are still rising are negatives but is not having a huge impact.

European Indices end the session mixed

Preliminary closes for Friday April 7th

The European major indices are ending the session mixed:
  • Eurostoxx 600 ends up 0.1%
  • German Dax was down -0.1%
  • France Cac was up 0.15%
  • UK FTSE was up 0.6%
  • Spain Ibex up 0.2%
  • Portugal PSI 20 was down 0.37%
In the European 10 year debt sector yields are lower today:
  • German 0.226%, -3.6 bp
  • France 0.886%, -1.3 bp
  • UK 1.076%, -2.3 bp
  • Italy 2.216% -5.4 bp
  • Portugal 3.859% -4.4 bp
  • Spain 1.607% -2.5 bp

Soft NFP data has USD in retreat again but buyers lurking still

weaker than expected US non-farm payrolls data left bulls disappointed

  • Fed funds futures imply 61% now see June rate hike from 70% yesterday
  • 2year treasury yields hit 5 week low of 1.198%
  • 30yr yields touch lowest since 18 Jan at 2.939%
  • 5year yields 1.784% lowest since Nov 2016

So who thinks a rate hike is imminent now? Ok, so one swallow doesn’t make an summer but if the Fed is data dependent then this will have them scratching their chins at the very least

USD buyers returning though as I type as befits a market that’s chasing shadows with Syria and Trump/Xi talks also in the mix as I highlighted earlier.

GBPUSD back to 1.2428 after failing at 1.2450 again. USDJPY 110.44 from 110.16. EURUSD 1.0624 from 1.0667.

As we were then before the data came out but I hope you took the opportunity to take some profit or enter into fresh trades.

Fitch Downgrades South Africa to ‘BB+’; Outlook Stable -Full Text

Fitch Ratings has downgraded South Africa’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to ‘BB+’ from ‘BBB-‘. The Outlooks are Stable.

The issue ratings on South Africa’s senior unsecured foreign- and local-currency bonds have been downgraded to ‘BB+’ from ‘BBB-‘. The rating on the sukuk trust certificates issued by RSA Sukuk No. 1 Trust has also been downgraded to ‘BB+’ from ‘BBB-‘, in line with South Africa’s Long-Term Foreign-Currency IDR.

The Short-Term Foreign-and Local-Currency IDRs and the rating on the short-term local-currency securities have been downgraded to ‘B’ from ‘F3’. The Country Ceiling has been revised down to ‘BBB-‘ from ‘BBB’.

The downgrade of South Africa’s Long-Term IDRs reflects Fitch’s view that recent political events, including a major cabinet reshuffle, will weaken standards of governance and public finances.

In Fitch’s view, the cabinet reshuffle, which involved the replacement of the finance minister, Pravin Gordhan, and the deputy finance minister, Mcebisi Jonas, is likely to result in a change in the direction of economic policy. The reshuffle partly reflected efforts by the out-going finance minister to improve the governance of state-owned enterprises (SOEs). The reshuffle is likely to undermine, if not reverse, progress in SOE governance, raising the risk that SOE debt could migrate onto the government’s balance sheet.

US Attack in Syria Significantly Damages Russian-US Ties – Kremlin

The US launched 59 Tomahawk cruise missiles at the Syrian military airfield in Ash Sha’irat near Homs late Thursday. US President Donald Trump said the attack was a response to the alleged chemical weapon use in Idlib on Tuesday, which Washington blames on Damascus.

“This move by Washington is causing substantial damage to Russian-US relations, which are in tatters as it is,” Peskov told reporters.

US Secretary of State Rex Tillerson said in a statement after the US attack that there were no discussions or prior contacts between the United States and Moscow ahead of the missile strike on the Syrian base.

Swiss reserves swell again to new record

With the reliability of a finely-tuned watch, the latest release of foreign-currency reserves held at the Swiss National Bank has shown yet another record, in a sign the central bank continues to swim against the tide.

Reserves swelled to SFr683.2bn ($SFr679.3bn) in March, up by nearly SFr15bn on the previous month.

The euro now trades at SFr1.07. Deutsche Bank thinks the Swiss currency will climb much further from here, taking that rate to parity.

Among the reasons, it says the Swiss authorities may feel some pressure from the US:

The US Treasury looms large, as it is due to release its latest report on the FX policies of US trading partners sometime this month. As argued elsewhere, Switzerland is already closest to meeting all three criteria of currency manipulation. Its current account surplus runs well above 3% of GDP, and the SNB has intervened well in excess of 2% over the past year. In the past, the Treasury acknowledged the constraints on domestic asset purchases given the limits of the Swiss bond market; but such subtleties could fall by the wayside under the Trump administration. Free trade with the US is too important for Switzerland to be risked by continued FX intervention.

In addition, inflation is picking up, and the German bank disputes the idea that the franc is overvalued.

US Launches Air Strike On Syria: 60 Tomahawk Missiles Hit Syria

As previewed earlier tonight, the US has launched air strikes against Syria, with NBC reporting that under instructions from President Trump, US ships have launched over 50 Tomahawk missiles, striking Syria. NBC adds that only tomahawks missiles fired, no fixed wing aircraft involved, for now.

According to CBS, the U.S. launched about 60 Tomahawk missiles against the Syrian airfield where the plane that allegedly carried out the chemical attack took off from; hangars and planes were targeted, a U.S. official says.  Two Navy destroyers launched Raytheon missiles against Syria two days after Bashar al-Assad’s regime used poison gas to kill scores of civilians

The market’s reaction was immediate: