Time for a dead cat bounce?
Happy Monday, everyone! Hope you all had a great weekend and that you're all doing well as we look to get the new week going. Risk will continue to be the number one focus in the market this week, with coronavirus to remain as the main topic on everyone's lips.
It has been a polarising subject across the market, as we saw a spectacular meltdown last week. The question for traders and investors this week, is this worst over? Maybe a dead cat bounce? Or are we setting up for a V-shaped recovery now?
For now, there is some relief after the selloff last week as there is growing hope of global central bank stimulus to come in and rescue the market in the coming days.
But in an event where this turns into a global pandemic and cause a major supply-side shock, it is hard to imagine rate cuts and monetary policy being able to do anything.
Again, a key point that most traders are missing is that the virus being as deadly as the common cold doesn't mean that it won't be bad for the global economy. The fact that it has the threat to become a major inconvenience in itself is worrisome enough.
For those interested, I shared my thoughts over the weekend on what I am focusing on in this whole ordeal and how I am viewing the market reaction here and here.
0815 GMT - Spain February manufacturing PMI
0830 GMT - Switzerland February manufacturing PMI
0845 GMT - Italy February manufacturing PMI
0850 GMT - France February final manufacturing PMI
0855 GMT - Germany February final manufacturing PMI
0900 GMT - Eurozone February final manufacturing PMI
As these are mostly final releases, they will hardly matter much during a time like this. In any case, headline PMI readings are basically dead at this point. It is all about the details now, as seen by how deceiving the initial German estimate can be (same case for Australia today). As such, expect little reaction from the releases above.
0900 GMT - SNB total sight deposits w.e. 28 February
Your weekly check of the deposits kept at the SNB by Swiss banks. This data is a proxy for FX interventions.
0930 GMT - UK February final manufacturing PMI
The preliminary report can be found here. The initial release already highlighted some minor supply chain disruptions so I wouldn't expect the final release today to tell us much of anything new as it will just reaffirm some steadiness post-election.
0930 GMT - UK January mortgage approvals, credit data
Prior release can be found here. A general read of credit conditions in the UK economy, which has been stabilising a little somewhat. A minor data point.
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading!
