Global Markets React to Strong U.S. Jobs Data and Rising Yields 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Bank of Japan Signals Cautious Path Toward Further Rate Hikes Amid Yen Weakness 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
New York Fed President John Williams Signals Rate Hold as Economy Seen Strong in 2026 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
BOJ Rate Decision in Focus as Yen Weakness and Inflation Shape Market Outlook 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
U.S. Prosecutors Investigate Fed Chair Jerome Powell Over Headquarters Renovation 
Philippine Central Bank Signals Steady Interest Rates as Inflation Rises and Growth Slows 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
Euro area composite PMI post a solid gain in October, signaling 1.8% ar GDP growth.
Improvement was broad-based by sector and country and was reinforced by IFO and EC surveys
Last week’s Q3’16 flash GDP prints an unchanged 0.3% QoQ, SAAR growth, with modest downside risks, while Japan managed to produce an upbeat numbers of 0.5% versus forecasts of 0.2% and previous 0.2%.
October flash inflation report to show core inflation stuck at 0.8%oya.
On data front, the major focus -
For today:
EMU: ECB’s Draghi to speak
Sweden: Riksbanken’s af Jochnick to speak
Highlights rest of the week:
Tuesday: Consumer confidence in Norway in Q4
Wednesday: FOMC minutes from November meeting
Thursday: German IFO index in November
Friday: Japanese CPI inflation in October
From a recent visit of our reporters, we reckon given the recent US election, there were significant concerns on what a Trump presidency would mean for Japan, China, and the Asia region more broadly.
The pivot from monetary to fiscal policy was also a major topic for discussion. Investors have been shocked by the significant sell-off in global rates markets which look particularly acute against the moves in Japanese yields.
Other significant topics were commodity prices, the valuation of Semi government bonds, the cross currency basis market and debt issuance trends.
Ahead of today’s Draghi’s speech, 1w IVs of this pair are rising but you could make out from the skewness of these IVs that are reluctant to signify their interest on either of the spot FX moves but 1m skews signify hedgers' interests in OTM put strikes.long-termng term foreign traders firmly destined to hedge the further downside risks. Let’s also observe 1w risk reversals with positive flashes, compare these computations with ongoing rallies of EURJPY, hence, we reckon capitalizing these rallies optimally utilize in our below option strategy.
Hedging Positioning:
“Short 1w (1%) ITM put option, go long in 1 lot of long in 1m ATM -0.49 delta put options and another 1 lot of (1%) OTM -0.36 delta put of 1m25d tenor.” Using diagonal tenors would keep us hedging positions riskfree as well as reduces the cost of hedging to almost 50%.
The position is a spread with limited loss potential, but varying profit potential. The degree of profit relies on the strength and rapidity of price movement. The position uses long and short puts in a ratio, such as 2:1, to maximize returns.
