 Okay very good morning to you Anthony here on the desk Thursday the 20th of August I hope you're doing well and first of all Thank you very much for everyone who joined us for the live FMC minutes coverage last night If you didn't then go to the YouTube channel I'm on it here just to show you if you scroll down We've got different categories of content essentially by different members of the team covering their specialisms But if you go to the live session recordings You can access the the minutes recording there and there was a session last night run by myself Sam and Alex Preview into the whole event both fundamentals and technicals and then the live release and why the market did what it did in the immediate Aftermath and how we would make sense and look to trade a news driven event like that. So perhaps a good Example for you to go back over In time perhaps at the weekend if you want to do some kind of Reviewing and further further work on your on your trading game, but yeah other than that Really great to catch up again with some familiar names as well as those new So another one more live sessions coming so don't forget to subscribe to the channel We've got a brand new video coming from Milan deep from our tech team on Algorithmic versus discretionary trading on Saturday. So I think you'll enjoy that one as well But just having a look then at what we've got. Let's go back to the charts and For this morning. It's kind of the the morning After the night before if that makes sense It's kind of the the aftermath of the FMC minutes and there's definitely a little bit of Content I want to just discuss around this point and some of the market moves that have occurred this morning I think are quite telling of where I think now markets will go Going forward but overall as you can see on the charts the immediate aftermath of the minutes or equity index futures move lower So we had a lower close on Wall Street and generally then that led to a move lower in the Asia-Pacific session everywhere from Japan China Australia Hong Kong and South Korea were lower overnight and In terms of European morning the DAX then following suit futures down about 143 points this morning Elsewhere the dollar has held on to the bounce that it saw after the minutes So we're up about two tenths of 1% so that has seen then a full reversal of Just putting it in context though It's only the last two days or so gains that we've seen in these major currency pairs in euro dollar And in cable so it does look quite extreme the downward movement But as I'm going to discuss shortly largely that's a byproduct of how extreme the dollar selling Has been and it really has been a dollar narrative Not so much euro and sterling which has been driving this FX market elsewhere gold did dip last night We went from around 1975 to overnight in the Asia-Pacific session. We actually got down to around 1930 Before we've seen a pretty sharp bounce actually a $30 bounce So we've retraced almost two-thirds of that initial sell-off in gold and if we look down here in the bottom right-hand corner T-notes I moved lower last night initially of some six seven ticks all of that reversed and some And we're actually trading higher now than where we were prior to that release only by around half a tick or a tick Or so the interesting point there being that although equities remain Suppressed if you like post a minutes last night the tenure has already recovered And I think that in itself is a really telling point because I think when it comes to the FX move and the equity move I think both of those two assets are more reflective of the over-extended positioning that they were in equities at all-time highs ripe for a bit of a pullback for any given reason or catalyst and the same with the dollar-based pairs Given the persistent selling we've seen in the greenback. In fact the dollar Had sold off for pretty much five days in a row So it didn't take much then for it to see it just bounce back higher The overall summary here from my perspective and I'll walk through the minutes is that I don't think that these moves will last I think equities will recover I think T-notes will continue to remain kind of where they are. I think gold will continue to bounce over the foreseeable future And I think that yeah those currency markets like euro dollar and cable Will find a footing and the dollar will recommence that downward trend is my overall expectation But having a look a quick look at the minutes It really is quite interesting actually because when you're reading Bloomberg I read Bloomberg Reuters and the FT's as well as a few other things their kind of interpretation of what happened in the minutes and It's one of those things really I think When it comes to these news organizations Typically, they're not market practitioners. They're journalists and it was quite interesting because the spin that Bloomberg Puts on this is that the sell-off really was down to how downbeat they were the fact that the health crisis to pandemic Would weigh heavily on economic economic activity I Actually think they're wrong. I don't agree with that statement And I thought the FT the Financial Times did a way better Analysis and coverage of this situation for me It was Bloomberg not really understanding the mechanics of how markets work And as we were discussing in the the live session we did last night It was all to do is really about how the market was positioned and what it was Expecting as to why the market did what it did in that kind of negative type reaction Not to do with the fact that they were decidedly downbeat I don't think that was the sole catalyst for why why it happened a few other points there So the main thing is a lot of people are looking ahead with high Anticipation about what are the Fed going to do with enhanced forward guidance and that being and things like this average inflation targeting or yield curve control Particularly and we were we were waiting to see the depth of discussion around these particular points but the idea here was that they indicated last night and this was what the minutes actually look like They indicated no immediate plan to take unconventional measures to support market stability You know such explicit guidance like a path on federal funds rate in the future or your curve control was not present And you know the reason why I'm showing you the minutes here This is the actual documented minutes I mean we're talking quite a likely document was because last night if you're actually trading this the information didn't come out Immediately which was incredibly unusual normally. This is a time to release is embargoed meaning then London time at 7 p.m It just hits the tape and all the information comes out that didn't happen last night and that did bring about quite an interesting thing for a new trader, which is you've got to be calm in those situations. It was quite It can be tempting then to just heighten the nerves and you get a bit apprehensive You can make a fairly irrational decision under those conditions Important thing is if you haven't got the information to hand and how can you make a decision if you just start trying to hit? Any volatility in market price that you're seeing without knowing underline of why it's doing what it's doing I think that's a recipe for disaster essentially so here then you know This was the this is the main thing that people are looking for really is this ongoing review of Monetary policy strategy tools and communication practices at the Federal Reserve It's been going on for some time, but it's the outcome of this Which is going to be particularly important for then the future forward guidance and subsequently then our insight as to how they're going to manage the economy going forward The point being is we've got some really big events coming up At the end of the month you've got a virtual Jackson Hole symposium, which is one of the major platforms the Federal Reserve chair uses to communicate His thoughts about current conditions, but future monetary policy actions, and then that is teaming us up nicely for a really big FOMC meeting on the 16th of September that's going to be a big one because that's when we are going to be looking for the these details so to me The best summary I've read this morning about the FMC minutes was this That the commentary that in the minutes suggests an ongoing weak economic backdrop Where inflation remains persistently low yet? There is little inclination to offer additional imminent support to the economy And that being then the lack of details and some of those other unconventional options I've just mentioned that in itself was the disappointment and why we sold off because the market from a positioning point of view is hungry for more and It just fell short of that and fell a little flat Does that mean that the Fed aren't going to deliver on this promise of further additional unconventional policy? I think no I think they will and that's why I think these moves that we've seen will be decidedly short-lived And I think we will resume normal service soon enough perhaps even as soon as today that meaning I think equities will bounce today And I think the dollar will now pair some of that initial strength that was seen from yesterday I think that was a if anything a byproduct of it just not delivering on those dovish notes that some people were expecting So hopefully that makes sense Few other things I want to talk about that have happened in the overnight session This is talking about US and China Obviously following the delayed meeting and a few few pop shots from Trump saying that he he was the one who is in Controlled that situation over the last couple of days The latest here is that US has announced it is suspending its extradition treaty with Hong Kong and Ending reciprocal tax treatment for the former British colony and the Hang Seng actually was one of the biggest underperformers Overnight was down around 2% is in line for its biggest loss in almost a month on the back of this So not massively Game-changing here. It's just kind of the next evolution Of how Hong Kong's been in the spotlight as per the the bigger broader Situation that's unfolding with mainland China at the moment The other thing from a news perspective is this We've been waiting of course for when is the stimulus coming out of the US And they've been at loggerheads for the last two weeks now really an impasse where they failed to Since the end of July when a lot of those benefits had ceased obviously the the executive orders from Trump have done Partial job as a kind of placeholder for now, but ultimately The market will be expecting some kind of stimulus to be forthcoming So timing of this is quite key and basically the latest here is that Trump spokeswoman said that the administration was willing To look at 25 billion dollars in additional funding for the US Postal Service Now why is that important? Well, that's the amount Democrats put in their original Stimulus plan and are including in post office legislation that they expect to pass in the house this weekend on Saturday now Stephen Mnuchin and Senate Majority Leader Mitch McConnell has said Pelosi's decision to break out The 25 billion in funding for the Postal Service away then from this overall Democratic stimulus package as a whole that they've been trying to negotiate and push forward Could then provide an opening for talks if they're just going to settle on this one part of the issue If you can't agree on the whole if you can break out little parts and start to at least work on those Individually of which this would indicate perhaps then the dialogue can become and the compromise can start happening Would be my my interpretation of this Does this mean that there's a looming Stimulus agreement in the offing absolutely, you know, but it perhaps is another step towards Inevitability that we on the desks do think that stimulus will be coming at some point It's just the fact that given the way that markets have behaved Covid has behaved in the States economic data recently has behaved the pressure just really hasn't been on for them to make a more decisive Timely piece of action so far they can play it out because of those more stabilized factors Okay elsewhere Covid what's been going on? Well again, it's a little bit split globally And I'm going to focus on mainland Europe and in the US to kind of two key areas that the market generally is quite sensitive to in the Western world France as you can see from the headline here reported its biggest increase in new coronavirus cases since May so a few extra measures that they're now adopting regarding face masks and so on in major populous areas Neighbours including Spain Germany, Netherlands have all been grappling with us a kind of moderate resurgence that they've seen of late However on the flip side, this is America and obviously America being the world's largest economy Intrinsically important for the performance and outlook for the global economy. The US situation still is improving As you can see here, we've got number of positive covid cases per day continuing to decline as it's a seven-day average Hospitalizations is continuing to decline as to now our deaths over a seven-day rolling average So, you know, I think part of the reason why Covid is still Obviously to be monitored to remain vigilant for any updates in terms of it actually having a meaningful impact on markets at this point I think this really underlines this graphic of the US situation of why the market is fairly Comfortable of where we're at with this subject matter for the moment And that's why I do not see it being an issue right now Not unless these numbers in the US start to change direction But they're all uniform pointing in a positive way at the moment. I the situation is getting better Not worse for the time being despite what we're seeing in some other locations in Western Europe Western Europe could be a threat, of course But it needs to accelerate considerably in terms of the case numbers So not quite there yet, but perhaps something to be monitored going forward The other thing we had yesterday was OPEC plus the JMMC meeting the Joint Ministerial Monitoring Committee met What did they say? Well, they didn't throw out any surprises really at all They basically said they want to press for compliance with the existing agreement between OPEC and its allies The cuts would deepen this month They said overall and next month, but that's because of compensation cuts by Iraq, Nigeria and Gola Kazakhstan because the fact that they overproduced Too much oil in the May to July period and perhaps this graphic really Shows this best What this has got here is some of those key target OPEC countries It's then got the target of which they were supposed to have cut by and obviously some countries much larger Or I should say the target that is supposed to have produced at a maximum amount to Obviously countryside Saudi their maximum amount of production is way higher than the others very much dominated by the likes of Iraq and so on But you can see here if we tally Mace production figures June July and then we go all the way to the right-hand side here You can see in the case of Saudi Arabia as they have always done pretty much in the last few years They've over they've been overly compliant You know picking up the tab if you like for some of these uncomplaint nations But now they're starting to put the pressure on and why well, it's not just Saudi now Russia are involved other countries are involved and in order for them to be appeased by the deal that everyone's got a Playball and the biggest culprits here are the ones that you can see with the biggest plus numbers So Iraq was 283,000 barrels per day of oil Uncompliant Nigeria was a hundred and eleven thousand barrels per day Uncompliant so these are your biggest culprits, and I don't think that those two countries really come as a big surprise So overall nothing really to speak of I won't wouldn't say directionally I've changed my my view at all on oil I think oil at the period of the last three days has been in a relative period of consolidation really between 42 and a half 4325 in in the front months futures contract. So yeah, that was the latest on that side of things Calendar wise for today What have we got this morning? Particularly quiet and I think really substantial of nature But we do have these few minutes coming out although we're not expecting a great deal that'll be at 1230 London time US jobless claims. Yeah, it'd be interesting They are expected to show a minor decline again Which would consolidate then a three-week trend of what we've had of jobless numbers decreasing So hence again, the reason why saying that generally we have had some more positive Data points coming out in the US and we'll see if jobless can continue that trend We also get Philly Fed business index as well at the same time speaker wise You've got the Bank of Canada deputy governor speaking in a panel discussion 5 p.m Feds daily and non-voting member speaking at 6 p.m. London time So mid-day Chicago supply wise quite a lot coming out of the French Tressall this morning And then you've got a US 2 5 7-year note and two-year Floating rate note announcement coming at 4 p.m. And then $7 billion in the 30-year tips for any fixed income traders That's happening at 6 o'clock Tonight Yeah, and that is it really so any questions at all, please feel free to leave a comment. Hopefully That brief overview of what happened and the interpretation of the Fed makes sense If it doesn't just leave a comment myself or Alex We can all help but do go back and check out the live coverage because Alex did a fantastic job in his preview of what to look out for and how to strategize and kind of Have a concrete playbook of scenarios ahead of a big news driven event That really did play out nicely yesterday. So yeah, check that out when you get a moment Okay guys, that is it. I wish you a good day, and I'll see you same time tomorrow