Moldova Criticizes Russia Amid Transdniestria Energy Crisis 
Fed May Resume Rate Hikes: BofA Analysts Outline Key Scenarios 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Geopolitical Shocks That Could Reshape Financial Markets in 2025 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
Global Markets React to Strong U.S. Jobs Data and Rising Yields 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
Urban studies: Doing research when every city is different 
Everyone is waiting for Mr Trump's response on the US-China trade deal, especially after China asked for significant tariff rollback as a condition for the "Phase One" deal.
Last Friday, Trump indicated that a full rollback seems unlikely. Yesterday, he toughened his tones and threatened that the tariffs on Chinese goods will be raised substantially if a trade deal can't be reached. "If we don't make a deal, we are going to substantially raise those tariffs," he said. "And that is going to be true for other countries that mistreat us too." Clearly, there remains a huge gap between China the US, which would mean that an interim deal, even if can be reached, is unlikely to fundamentally address the US-China disputes. Trump's threat has clearly brought about a risk-off in the Asian trading session. KRW, a sensitive currency to risk sentiment, weakened by more than 0.5% this morning. USDCNY, in the meantime, has been climbing towards 7.03 mark.
The prospect of tariff rollbacks are now being discussed and current levels of USDCNY appear to be pricing in a good chance of such an outcome.
In terms of outright trades we recalibrate our CNH trades as follow to better reflect current market conditions. Given the sharp decline in USDCNH since we purchased the existing 7.15/7.35 call spread, the option is currently under water (mark-to-market -38bp). We re-strike the structure into an identical expiry (13 March 2020) 7.05/7.15 call spread for additional expenditure of only 7bp in premium; the new strikes are closer to current spot and are also more in line with our current USDCNH forecast profile (7.05 by year end, 7.20 by 2Q’20).
EURCNH front- end volatility has declined as anticipated after the initial press reports of constructive US/China trade talks in Washington last month, and the short mid- December expiry 7.65 – 8.0 strangle is in the money to the tune of 40bp.
We continue to look for additional volatility compression in Asian currencies as constructive cyclical and trade sentiment gains broader acceptance; hence we lock in the profit on the existing strangle and re-strike it into a fresh 2M 7.55 – 7.90 structure, such that the new strikes are better placed to accommodate a continued drip lower in spot. Courtesy: JPM & Commerzbank
