Wakeup Call: EM Sovereign Fixed Income CDS Prices Have Increased In The Past Week. Could Be A Negative Sign

Daily Forex Fundamentals | Written by Saxo Bank | Nov 18 08 08:28 GMT |

Several of the EM sovereign fixed income CDS prices have increased dramatically in the past week. We are almost back to the highs in late October. Could be a negative sign. Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment UK CPI YoY (OCT) 09:30 4.8% 5.2% US Producer Price Index YoY (OCT) 13:30 6.2% 8.7% US NAHB Housing Market Index (NOV) 18:00 14 14 What's going on? Several of the EM sovereign fixed income CDS prices have increased dramatically in the past week. We are almost back to the highs in late October. A negative sign. Our global Top100 stocks CDS index is unchanged around 100 bps., i.e. still very elevated. The anti-hedge fund trade is continuing, but at a slower momentum: Be short stocks, short EURUSD and short Crude Oil. And especially: Get out of EM related stocks. Stocks: Losses continuing. US closing lower, despite some strength late in the session. Especially financials under pressure. Talk about a possible devaluation of SGD. Also talk about RUB and Baltic Currencies (EEK, LVL, LTL). FX FX Daily stance Comment EURUSD - Nervous market, range constricting. Sell <> EURJPY - Bearish if below 122.80 area. 120.00 initial support and then 118.50-80 USDJPY 0/- Rangy. 96.00 needs to go for more downside. Resistance around 97.20-40 GBPUSD - Bearish if below 1.5080. May fall back much lower if falls <> AUDUSD - Intervention fears giving fake support? Sell if <> Equities Equities Daily stance Comment DAX - Sell at the break of 4487. Target 4318. S/L at 4524. FTSE - Sell at the break of 4113. Target 4036. S/L at 4145. S&P500 - - Nasdaq100 - - Nikkei225 - - Futures Commodities Daily Stance Comment Gold (XAUUSD) - Sell around 735. Stop above 741. Target 732. Silver (XAGUSD) - Sell around 9.48 with a stop above 9.60. Target 9.10. Oil (CLZ8) - Sell at the break of 54.70. Stop above 56. Target 52.50. Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations. The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time. In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.