Antipodean Capital Macro Strategy Daily Jan 30 - US consumer confidence falls into the Fed. FOMC have a high hurdle to meet dovish expectations. True data dependence and a FF cycle high at are probably needed. Balance sheet change may help

Today’s themes: Not a lot of new price action moves last night, as markets await the Fed tonight. In terms of data, the only (but important) piece of data was the sharp fall in the Conf Board consumer sentiment data. Tonight the key is what the Fed will not only confirm from their prior messaging (that they are on hold, likely for 6mths), but whether they plan for any further hikes down the track, or whether this is the peak in the FF rate. Also, whether they change balance sheet end size or monthly caps will be key as well.

Macro: Fed tonight: Will the Fed puncture the stocks rally or extend it? The absence of forecasts and dot points this meeting may assist them in providing positive messaging guidance, around an on hold posture that is data dependant, inflation driven, but may avoid the tricky question of whether FOMC participants still think the cycle high in Fed Funds is higher than now. Balance sheet commentary is the likely wildcard, which while likely misunderstood, may be seen as a positive as well.

Summary: Stocks ended the overnight session largely little changed, although US 10yr yields fell a few bps in response to the only major macro news of the night, a fall in the Conf Board Consumer Sentiment survey (126 to 120). FX markets were largely becalmed outside of GBP weakness due to a series of Brexit votes, but with the outcome being parliament supporting a softer Brexit. Oil and precious metals were higher.

New trades: None.
FX: Short $JPY at 107.50 risk 110. Long EUR$ at 1.1360 risk 1.1260 target 1.18. Long JPYKRW at 9.85 risk 9.76 target 10.30.
BONDS: Long 2 units ASX Banks 5yr CDS at 54bps, target 140. Long NZ 10s short NZ 2s at 104bps risk 130bps target 50bps. Sold Portugal 10yr bought German Bund at 158bps, risk 110bps target 350bps. Bought US 10’s at 2.91% risk 3.1% target 2.6%. Sold HYG at 83.55 risk 85 target 80.
EQUITIES: Long ASX All Ordinaries Top 100, Short ASX Small Ordinaries at 0.81x ratio.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65. Long Silver 14.08 risk 13.85 target 17. Bought Gold at 1243 risk 1230 target 1380. Sold WTI at 52.70 risk 54 target sub 49.