US GOVTS:FUNDING-New York Fed OMO increased; Confusion abounds

This can’t be a good thing for market Confidence

From IFR news “According to news reports, tomorrow’s Overnight operation may now be $100 bn and the 14-day term operation will be doubled to $60 bn.

*This change was welcomed in the collateral market as GC is now trading 1.85% bid.

*However, it seems that confusion abounds due to language used in the stated schedule provided by the New York Fed where the operations were said to be at least $75 bn and at least $30 bn. *That language led many players to believe that the current operations would satisfy any oversubscription in bidding. This morning’s operation had $91.95 bn but the New York Fed only accepted $75 bn. “

New Home sales

Bonds and gold paying more attention to the big beat in U.S. new Home sales then the Impeachment debate.Dollar index making news highs trading +.5% breaking out of a short term range with a bit of Momentum.Focus on the Economy for a bit is a welcome change to the Political ongoings. Treasuries heavy and Gold -.6%

From trading Economics “Sales of new single-family houses in the United States jumped 7.1 percent from the previous month to a seasonally adjusted annual rate of 713 thousand in August 2019, following a revised 8.6 percent slump in July and easily beating market expectations of a 3.5 percent increase. New home sales in the South rose 6 percent and those in the West soared 16.5 percent.”

Morning 9-25

Everything trading lower with exception of Dollar, Spoos, treasuries, oil Gold and copper all in the red. The Dollar has staged an impressive rally over the last hour or so and this may be weighing a bit on Commoditties, API Oil numbers were bearish yesterday evening and this too is weighing on Crude prices down 2%. The JPY traded lower likely do to this from Reuters “5y JGBs hit a record low overnight of -0.40% after falling through the lows of last month July 2016 lows. The move has been helped by BoJ governor Kuroda’s comments on Tuesday that said that easing policy further would involve pushing down short- and medium-term rates without flattening the yield curve too”  If  Stocks are trading risk Off due to Impeachment inquiry then one would think Bonds would be bid. Let us wait and see the results of today Repo operation and then discuss what Bonds are doing. European Bourses all in the red Dax -1% .China did pledge to buy More U.S. Hogs so I will be keeping an Eye on that market when it open as 8;30

Political issues front and center now for  U.S. markets and these issues will not end soon. Talk starting to emerge regarding trading a “political market” and they are not good (Bloomberg) — When it comes to having an edge in trading financial assets during times of acute political uncertainty, all I can say is that I wish you good luck. One need only look at the ebb and flow of sterling positioning during the tortuous Brexit process to observe how having a view isn’t quite the same as having an edge, and any impeachment proceedings against Donald Trump may well exhibit the same flavor.

Results from Repo Operation is bullish Bonds   From IFR -Overnight Repo sees largest oversubscription so far $92 bn bids for $75 bn operation ….Bullish bonds

Fed speak today

9:00 Feds George and Brainard

President trump will speak later at the U.N. I will be monitoring Political twitter as the pro and against Impeachment conversation will be public. No Economic releases of Note but weekly Mortgage applications reported one of the biggest weekly drops in months. As a side note the U.S. house of representatives is on a two week break starting next week??/

Additional weight on Tech Stocks

Charles Gasparino @CGasparino ( Via mizuho)

SCOOP: Trump @WhiteHouse devoting significant resources to crackdown on Big Tech; 2 units in the @TheJusticeDept and one in the @FTC investigating alleged big tech abuses; biggest target of White House appears to be @Google more now @FoxBusiness @TeamCavuto $GOOG $AMZN $FB $AAPL

Comments From Axios regarding Dem’s latest moves

The Democratic chairs of the House Intelligence, Oversight and Foreign Affairs committees sent a letter to White House counsel Pat Cipollone on Tuesday demanding that the Trump administration turn over documents related to the president’s alleged attempts to pressure the Ukrainian government to investigate Joe Biden by Thursday.

“If the recent reports are accurate, it means the President raised with a foreign leader pursuing investigations related to a political opponent in an upcoming U.S. election. That is the very definition of corrupt abuse of power.”

Why it matters: The letter marks a significant escalation of rhetoric from House Democrats — one that aligns with speculation that the caucus could launch impeachment proceedings imminently if Trump fails to cooperate with the Ukraine investigation.

  • The chairs wrote that that Trump’s alleged wrongdoing is compounded by the administration’s efforts to block an intelligence community whistleblower from reporting a complaint to Congress.
  • They called on the administration to ensure that officials with knowledge of the complaint are not subject to “intimidation, reprisal or threat of reprisal,” which they said would be “illegal” and treated with the “utmost gravity.”
  • The letter closes: “Failure to comply with our request will compel our [committees] to resort to escalated measures.”

Morning 9-24

A few items causing a subtle risk on move in Stocks:

  • US Treasury Secretary Steven Mnuchin said in an interview with Fox Business Network that US-China trade talks were set to resume in two weeks, and that the  Vice premier is headed to Washington in 2 weeks’ time. China also bought a few cargoes of U.S. beans to help with trade tensions.
  • The U.K. Supreme court ruled that Prime Minister Johnsons Suspension of parliament was Unlawful; this means lawmakers can reconvene; this is a blow to Johnson Brexit plan and possibly his role as PM. GBP rallied on the news gilts sold off.

 Bunds off a handful of tick’s treasuries steady as today starts the $113 B in treasury auctions of 2, 5, and 7s.Also markets waiting to see the results of the Overnight repo operation and the first 14-day repo from the Fed results should be published within the hour. Spoos + nine handles, NASDAQ +26. European Stocks Mixed as more Legal worries for Volkswagen weigh on stock -2.77% and dragging the Auto sector lower. In the commodity space oil -1% as Saudi Says production to be back to normal sooner rather than later, Nickel -2% and Nat Gas +1%. Dollar sideways to lower.

Results are in for the First 14 day repo from the Fed and not good, in the sense that demand was higher for Funds offered indicating a need for more liquidity.

Today’s 14 day Term repurchase operation garnered $62 bn in demand for $30 bn offered. The breakdown of operation was as follows:

  • *Treasuries $22.732bn at an average of 1.961
  • *Mortgage-backed $7.268bn at an average rate of 2.007%

Calendar:

  • 9:00 Consumer confidence
  • 9:15 President Trump speaks to the U.N. He will discuss Iran. The president will have ample opportunity to makes comments today as he spends the majority of it at The United nations.