Morning 10-12


  • The People Bank of China cut the forex risk reserve ratio for forward contracts to 0% from 20% during the weekend, making it easier to short the yuan. The currency rallied since mid-May as investors rush to buy Chinese assets and debt amid signs of a faster and sustained economic recovery. In Q3, the renminbi gained 4% against the dollar, the strongest quarterly gain in 12 years.  (Trading Economics) Weaker Yuan normally bad for risky assets not the case so far today
  • The Shanghai Composite added 86.39 points or 2.64% to 3358.47 on Monday, posting its largest rally since July 20th, following a gain of 1.68% on Friday as investors cheered further policy support for the Chinese economy (trading economics)  CSI 300 + 5% over last 2 days

  • Natural gas gap and Go on the open +5% 2+year highs as LNG demand continues, Colder forecast and a dip in production causing the big move higher
  • Earnings season starts this week   from WSJ “- Investors are entering third-quarter earnings season with brighter expectations for corporate profits, a bet they hope will propel the next leg of the stock market’s rally.

  • Nomura, I believe is saying to sell the VIx kink around election as the market is pricing a bit too much event risk
  • Twitter will make it harder for posts to go viral ahead of the U.S. election, including by putting limits on how users can retweet and pointing users viewing certain tweets to credible content. WSJ 

Latest on Stimulus talks:

Top Trump administration officials are calling on lawmakers to pass legislation to redirect unused funding from a small-business lifeline, the latest salvo in a week of twists and turns in talks between the White House and congressional leaders on a new round of coronavirus stimulus.

White House chief of staff Mark Meadows and Treasury Secretary Steven Mnuchin wrote in a letter on Sunday to members of the House and Senate. “The all-or-nothing approach is an unacceptable response to the American people.”-Politico   remember it is the Senate republicans comment we need to watch they are the ones who do not want to spend $2 t

The nearly $1.9 trillion coronavirus aid package offered by the Trump administration hit resistance from both Democrats and Republicans over the weekend, deflating hopes that a bipartisan agreement was imminent-WSJ


Cash bonds closed due to Holiday, Futures little changed. European yields continue to drift lower, Italian 30 year yields -6 bps today approaching multi year lows. All European 10s and 30 year yields lower today Expectations for More ECB bond buying likely the reason. Stocks higher on the Stimulus hopes   Nasdaq +1.7%, Spoos +.67% Stoxx 50 +.8% Dax +.7% dollar steady to higher. I am a bit surprised not a lot higher with the weaker yuan. Gold and Silver steady to higher cotton back to pre-virus levels +2.2% today Soybeans down .2%   what gives there. Crude -1.5% brent -1.3% adding the the over suppl yes Libya announcing that her biggest oilfield has restarted

 This week’s econ calendar shows CPI, PPi and retail sales. President trump will be back on the road campaigning in all the battle ground states. Today the Senate starts the confirmation hearings for Amy Barrett, nothing many Dems to stop her nomination

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