13 Fundamentals wc 25319 Domestic Sentiment Mueller finds

13 Fundamentals w/c 25/3/19 Domestic Sentiment Mueller finds no collusion between Trump and Russia; Week starts in sour mood after bad PMIs on both sides of Atlantic; 3 m/10 y yield curve inversion Events Risk Off Themes Tuesday Yield curve inversion seen before recessions in 1990/1, 2201 and 2007/9 Slightly positive Wednesday Yield curve inversion continues; Fed nominee Governor Moore called on Fed to immediately cut rates by 50 bps Slightly negative Thursday Friday Yield curve inversion continues On On Final GDP Core PCE Equities, GBP (GBPCAD); CADJPY USD Strong Dovish Fed, less QT, emollient Trump EUR Weak? ? Dovish ECB week 10 JPY Swing GBP Strong CAD Comm AUD Comm NZD Monday Ongoing Brexit uncertainty Market forecasts cut this year German Prelim CPI PM May’s strategy seems to be to allow indicative votes as means of threatening Brexiteers with soft Brexit, forcing them to vote for MV 3 Parliament votes to give itself power to hold indicative votes Indicative votes – all 8 fail; PM May to resign once Brexit delivered Current Account; Final GDP; Brexit Vote (WA only – fail) Trade Balance GDP Cash Rate – Inflation risk now skewed to downside; next move likely rate cut Comm CNY Equities Strong Gold Swing Oil Crazy QT, Tax bill, earnings, less QT, concerns about global growth Yield curve inversion continues, pressuring equities Iran sanctions, OPEC+ production cut; concerns about global growth API Inventories: +1. 9 m vs exp -1. 2 m EIA Inventories: +2. 8 m vs exp -1. 1 m Trump “very important OPEC increase the flow of oil”

14 Fundamentals w/c 1/4/19 Domestic Sentiment Monday DST in UK, EZ Yield inversion returns to normal and Fed says inversion was due to structural factors and is less of a recession indicator; US Chamber of Commerce positive on China trade deal Events Risk Tuesday On On Core Durable Goods Wednesday Trump to meet China VP Liu on Thursday On Thursday Friday More positive talk on China trade deal On On Themes USD Strong Dovish Fed, less QT, emollient Trump Retail Sales; Manu PMI (no estimate but seen as positive) EUR Weak? ? Dovish ECB week 10 CPI Flash est JPY Swing Ongoing Brexit uncertainty Manu PMI; Indicative Votes – all fail GBP Strong CAD Comm AUD Comm NZD Comm ECB Mtg Accounts - voices concern about growth Construction PMI; PM May to talk to Corbyn – softer Brexit mooted Services PMI; Chance of “No Deal” Brexit dies…long extension looks likely (Un)employment RBA Rate Statement CNY Retail Sales Manu PMI Equities Strong Gold Swing Oil Average Hourly Earnings; NFP Crazy QT, Tax bill, earnings, less QT, concerns about global growth S&P shows best quarterly performance in nearly a decade Iran sanctions, OPEC+ production cut; concerns about global growth Venezuela’s main oil port closed due to lack of electricity; US considering additional sanctions on Iran Holiday API Inventories – +0. 3 m vs exp -0. 4 m EIA Inventories – +7. 2 m vs exp -0. 7 m

15 Fundamentals w/c 9/4/19 Domestic Sentiment Monday US/China trade talks to continue this week Events Risk Neutral Tuesday Wednesday Thursday IMF cuts 2019 growth again, risks “skewed to the downside”. EU/US trade tensions Off Friday Trump criticizes Fed again Neutral On Themes USD Strong Dovish Fed, less QT, emollient Trump CPI (headline/core); FOMC Mtg Mins – majority expect no rate hike in 2019 EUR Weak? ? Dovish ECB week 10 Rate and Monetary Policy Statement – no news JPY Swing GBP Strong CAD Comm AUD Comm NZD Comm Ongoing Brexit uncertainty Gov prepared to change Political Declaration Legislation passed avoiding nodeal and seeking extension to Article 50 Emergency Brexit Summit (EU): Brexit delay until 31 Oct; GDP; Manufacturing Production Westpac Consumer Sentiment – reaffirmed forecast of RBA rate cut in August CNY Trade Balance Equities Strong Gold Swing Oil Crazy QT, Tax bill, earnings, less QT, concerns about global growth Iran sanctions, OPEC+ production cut; concerns about global growth Conflict in Libya API Inventories: +4. 1 m vs exp +2. 3 m; EIA cuts world oil demand forecast in 2019 and 2020 EIA Inventories: +7. 0 m vs exp +2. 6 m OPEC - output compliance at 155% (135% expected) OPEC Meetings

Week 15 Review Brexit Extension IMF pessimism/Fed dovishness EU/US Trade tensions Oil – supply problems; EIA cuts world oil demand forecast Little movement in equities (rescued by Friday’s China Trade Balance), GOLD and oil. Currencies were choppy and difficult to trade.

16 Fundamentals w/c 15/4/19 Domestic Sentiment Monday Earnings season starts in the US – today, earnings mixed Events Risk Neutral/Off Themes Tuesday NEC Director Kudlow says China talks making good progress Weak on Wednesday Thursday Friday Trump – trade talks successful, deal likely by end May Weak on GOLD; GBP; JPY; AUD; Equities USD Strong Dovish Fed, less QT, emollient Trump (Core) Retail Sales EUR Weak? ? Dovish ECB week 10 Flash Manu and Services PMI HOLIDAY JPY Swing GBP Strong CPI Retail Sales HOLIDAY CAD Comm CPI Core Retail Sales HOLIDAY Un(employment) HOLIDAY Ongoing Brexit uncertainty Average Earnings Index AUD Comm Monetary Policy Mtg Mins – no need for near-term move but would cut if inflation stays low and unemployment moves up NZD Comm CPI CNY HOLIDAY GDP Equities Strong Gold Swing Oil Crazy QT, Tax bill, earnings, less QT, concerns about global growth Iran sanctions, OPEC+ production cut; concerns about global growth API Inventories: -3. 1 m vs exp +1. 7 m EIA Inventories: -1. 4 m vs +1. 6 m; OPEC Meetings

Week 16 Review A quiet and short week with risk sentiment weakly positive. No Brexit news as the MPs get some sun. RBA statement moves to the dovish end of expectations. Equities grind upwards very slowly. GOLD drops for reasons unclear. Oil does nothing. Currencies remain choppy and difficult to trade.

17 Fundamentals w/c 23/4/19 Domestic Sentiment Monday Tuesday WIDESPREAD HOLIDAY Earnings season (US) continues Events Risk Wednesday Friday US/China trade talks to resume in US and China over next 2 weeks. Risk sentiment was modestly positive all week Themes Equities; AUD reversal (strength); EUR weakness; USD strength. USD Strong Dovish Fed, less QT, emollient Trump EUR Weak? ? Dovish ECB week 10 JPY Swing GBP Strong CAD Comm AUD Comm NZD Comm Advanced GDP Monetary Policy Statement – lowered GDP and CPI forecasts Ongoing Brexit uncertainty Rate Statement etc CPI: miss on all components. Citi, JP Morgan and RBC all calling for cut at next meeting Equities Strong Gold Swing Crazy HOLIDAY CNY Oil Thursday QT, Tax bill, earnings, less QT, concerns about global growth Iran sanctions, OPEC+ production cut; concerns about global growth US to end all Iranian oil sanction waivers, OPEC says they can cover the API Inventories: +6. 9 m vs exp 1. 3 m EIA Inventories: +5. 5 m vs exp +0. 9 m Tokyo Core CPI

Week 17 Review A short week with risk sentiment modestly positive from Tuesday. UK – MPs return and inter-party talks continue on Brexit. The AUD takes a hit as CPI misses badly and banks call for a rate cut. The S&P 500 and Nasdaq close at all-time highs. It is more mixed in other territories. In terms of FX trends, the USD rises and the EUR falls. The major non-trending move is the fall of the AUD.

18 Fundamentals w/c 29/4/19 Domestic Sentiment Monday Tuesday Wednesday Off Holidays - calm Thursday Friday Socialists win election in Spain, far-right breaks through Events Risk Neutral Themes Equities; AUD reversal (strength); EUR weakness; USD strength. USD Strong Dovish Fed, less QT, emollient Trump EUR Weak? ? Dovish ECB week 10 JPY Swing GBP Strong CAD Comm AUD Comm NZD Comm Prelim Flash GDP Strong Gold Swing Oil Crazy Average Hourly Earnings; NFP Holiday --------------------------Golden Week-------------------------Super Thursday – GDP and CPI forecasts up and down Ongoing Brexit uncertainty GDP: -0. 1% (no expectation) (Un)employment CNY Equities Fed Funds Rate – Powell downplays chances of lower rates. Core PCE Manu and Non-Manu PMI; Caixin Manu PMI Holiday API Inventories: +6. 8 m vs exp +1. 5 m EIA Inventories: +9. 9 m vs +1. 3 m QT, Tax bill, earnings, less QT, concerns about global growth Iran sanctions, OPEC+ production cut; concerns about global growth Trump tells OPEC to lower oil price