Daily Comments

Traders are looking for signs that China is ready to support Evergrande. The PBOC injected 120B of liquidity. Evergrande unveiled plans to pay Sept. 23 yuan bond interest. The Nikkei 225 slipped -0.67%. Back from holiday, the Shanghai Composite rose +0.40%. European markets bounced. The DAX index gained +1.03%. 10-year bunds yield -0.318%. For the week of 09/18, the MBA Mtge Apps Index rose +4.9% with strength in both purchases and refinance. EIA Crude Inventories dropped -3.5M bbls vs -6.4M last week. August Existing Home Sales printed at 5.880M vs. 5.90M consensus. The FOMC Statement noted a moderation in bond purchases may soon be warranted, with data suggesting a rate increase in 2022 rather than 2023. Chair Powell said about a Nov. taper, “I don’t need to see a good employment report next month; I just need to see a decent employment report.” 10-year Notes yield 1.306%. The December US$ Index added +0.25% to 93.430. November Crude Oil jumped +2.16% to $72.00. December Gold closed up +0.03% to $1,778.80. Stocks rallied ahead of the FOMC announcement and hit intraday highs afterwards.

There were mixed takes on the future of troubled property developer China Evergrande. Hong Kong’s Hang Seng Index firmed slightly but remains in bear territory. Overall, Asian markets were mixed. The Nikkei 225 fell -2.17%. The Shanghai Composite remained closed for a holiday. European markets rallied. The DAX index jumped +1.43%. 10-year bunds yield -0.317%. August Housing Starts rose +3.9% MoM vs. +1.0% expected, up to 1.615M (July’s -7.0% drop was revised up to -6.2%). Building Permits soared +6.0% MoM vs. +1.8% expected, (July was revised from +2.6% to +2.3%) up to 1.728M. The Q2 Current Account deficit came in at $-180.3B. The FOMC began a two-day policy meeting. 10-year Notes yield 1.323%. The December US$ Index lost -0.06% to 93.200. November Crude Oil added +0.80% to $70.70. December Gold rallied +0.65% to $1,774.50. Experts are weighing in about whether the Evergrande financial crisis will be a “Lehman moment” and grow larger. Meanwhile, the ES soared nearly 50 points overnight. Then early in the day session, the ES went negative. Just as quickly it then rallied well into the black, then lost its footing, closing modestly lower.

The troubles of property developer China Evergrande Group has traders questioning possible contagion. Asian markets were mostly lower. Hong Kong’s Hang Seng Index tumbled further, losing another -3.30%, and now off -22.8% from its cycle high in February. Its properties component was down more than -6%. The Nikkei 225 and the Shanghai Composite were closed for a holiday. European markets opened lower, remained under pressure all day, and closed negative. The DAX index fell -2.31%. 10-year bunds yield -0.32%. The September NAHB Home Builders Index printed at 76 vs. consensus of 75. 10-year Notes yield 1.311%. The December US$ Index added +0.06% to 93.235. November Crude Oil fell -1.55% to $70.71. December Gold jumped +0.81% to $1,765.40. In the overnight session, US equities traded firmly lower. As the regular session opened prices continued downwards. The shakeup surrounding massive Chinese real estate firm Evergrande is rattling nerves, as is the upcoming FOMC, and Congressional battles regarding spending and the debt ceiling. Stocks were relentlessly pressed lower nearly all day. In the last hour however, bulls pared about 1/3 of the session’s losses.