Category Archive: 4.) Marc to Market

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US Political Anxiety Stems Bond Sell-Off

2016-11-03

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2016-11-03

Yield
Bond yields have been rising in the US and Europe since the summer. There are some country-specific considerations and some generalized factors. Anxiety over US politics has helped bonds recover some lost ground.

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FX Daily, November 02: Standpat FOMC Trumped by US Political Jitters

2016-11-02

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2016-11-02

FX Performance, November 02 2016 Movers and Shakers
The single biggest driver in the capital markets is the continued narrowing of the US election polls. The prospect of a Trump presidency and the dramatic changes that could entail is rattling investors and spurring position squaring.The dollar is broadly lower as are stocks. The surge in global yields has been arrested.

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EC Pushes Back on (8) Draft Budgets

2016-11-02

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2016-11-02

Coloseum
Long before the UK referendum, many argued that monetary union was undermining the European Union. Many had expected Greece to be forced out not once but twice. There is a cottage industry of books forecasting the demise of EMU.

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Great Graphic: Sentix Shows a Shift

2016-11-02

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2016-11-02

Sentix Euro Break-up Index: Greece and Italy
The risk that the eurozone implodes over the next year has risen, but is still modest. Italy has surpassed Greece as the most likely candidate. The December referendum is the second part of Renzi's political reforms.

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FX Daily, November 01: Dollar and Yen Slip in Quiet even if Eventful Turnover

2016-11-01

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2016-11-01

FX Performance, November 01 2016 Movers and Shakers
The US dollar is posting minor losses against most of the major currencies today.The Japanese yen is the exception, as the greenback continues to straddle JPY105. There have been several developments today, and the US also has a full economic calendar today. The most important of the developments was the upbeat message from the Reserve Bank of Australia.

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FX Daily, October 31: Respite for Market Nerves Lifts Peso, Rand, and US Dollar

2016-10-31

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2016-10-31

FX Performance, October 31 2016 Movers and Shakers
he latest US political news before roiled thin pre-weekend markets, but cooler heads and more of them are prevailing today. Trump's fortune in the polls had bottomed prior to the re-opening of the investigation into Clinton's emails and the national polls have narrowed.

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Are Foreign Investors Done Selling Japanese Equities?

2016-10-31

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2016-10-31

Foreign investors have sold more than JPY8 trillion of Japanese equities through September. Nikkei technicals have improved and the yen has softened. Foreign investors have been net buyers for the past four weeks.

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FX Weekly Preview: Six Thumbnail Sketches of This Week’s Dollar Drivers

2016-10-30

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2016-10-30

Thumbnail
Four central banks meet, but expectations for fresh action are low. The US latest election news does not appear to be altering the projected electoral college outcome. UK press are speculating about Carney possibly resigning. We are skeptical.

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Weekly Speculative Positions: Bottom-Picking Sterling, Swiss Franc Even More Net Short

2016-10-29

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2016-10-29

weekly
Speculators increased their Short Swiss Francs to Net 18K contracts. While they started to bottom-pick Sterling. Not everyone is convinced that sterling will bounce.  The bears extended their gross short sterling position by 3.4k contracts to 147.6k.  On the eve of the UK referendum, the gross short position was around 94k contracts.   Again speculators, both bulls and bears have rapidly expanded their exposure in recent weeks.  In the most...

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Riksbank and Norges Bank Policy Meetings

2016-10-29

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2016-10-29

Six major central banks meeting over the next six sessions. Sweden's Riksbank is the most likely ease policy of these central banks, but it is not particularly likely. Norway is decisively on hold, as fiscal policy does some of the heavy lifting.

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Canada Renews Inflation Target, but Tweaks Core Measures

2016-10-29

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2016-10-29

Canada maintains inflation target of the middle of a 1-3% band. Adopts a trimmed and median core measure like Australia. Market seems to be under-estimating the risk of a BoC rate cut next year.

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FX Daily, October 28: Dollar Sidelined, Krona Stabilizes, Rates Firm

2016-10-28

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2016-10-28

FX Performance, October 28
The main development here in the last full week of October is the sharp rise in bond yields. US 10-year yields rose nine bp this week coming into today's session, which features the first look at Q3 GDP. The two-year yield is up four bp. European 10-year benchmark yields mostly rose 11-17 bp. UK Gilts were are the upper end of that range. Two-year yields are 3-5 bp higher.

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Yellen and Fischer Still Singing from the Same Song Book

2016-10-28

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2016-10-28

Many see Yellen and Fischer at odds over benefits of high pressure economy. However, this fails to put the comments in the proper context--same message different styles. They are arguing against the doves who don't want to hike this year.

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FX Daily, October 27: Rising Yields Continue to be the Main Driver

2016-10-27

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2016-10-27

FX Performance, October 27 2016 Movers and Shakers
The euro remains pinned near the seven-month low it recorded two days ago near $1.0850. It approached $1.0950 yesterday and has been confined to about a 15-tick range on either side of $1.0905 today. Against the yen, the dollar remains near the three-month high (~JPY104.85) also seen two days ago. New dollar buying emerged yesterday near JPY104.

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Great Graphic: CRB Index Revisited

2016-10-27

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2016-10-27

CRB Index
Interest rates and 10-year break-evens are rising. Some think the CRB Index is tracing out a head and shoulders bottom. We look for inflation in non-tradable goods' prices (think services).

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FX Daily, October 26: Euro and Yen Extend Recovery

2016-10-26

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2016-10-26

FX Performance, October 26, Movers and Shakers
After touching 1.08, which apparently the "new floor", the SNB moved the EUR/CHF upwards yesterday and Monday. Today's EUR recovery against USD, let also the EUR/CHF rise. The US dollar's upside momentum reversed in North America yesterday and has been sold in Asia and Europe. This seems like mostly position adjustments ahead of next week's FOMC, BOE and RBA meetings, in an otherwise subdued news period. The euro has at three-day highs. It has...

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FX Daily, October 25: Germany IFO, Dollar Going Nowhere

2016-10-25

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2016-10-25

FX Performance, October 25 2016 Movers and Shakers
The US dollar has been confined to extremely narrow ranges against the euro, yen, and sterling. To the extent that there is much action in the foreign exchange market, it is with the dollar-bloc and emerging market currencies.The Canadian dollar was whipsawed by comments from the Bank of Canada.

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Seven Things I Learned while Looking for Other Things

2016-10-25

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2016-10-25

Ideas
Mainland demand for HK shares has dried up this month. EMU growth may accelerate in Q4, while the collective deficit continues to fall. German fertility rate increased last year.

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Yuan Not

2016-10-25

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2016-10-25

There were two dogs that did not bark this year. There are the Japanese yen, which despite negative interest rates and an unprecedented expansion of the central bank's balance sheet, the yen has strengthened 15% against the dollar. The yen has been the strongest major currency, and the third strongest currency in the world behind the high-yielding Brazilian real, recovering from last year's drop, and the Russian rouble, aided by a rebound in oil.

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FX Daily, October 24: Dollar Begins Mostly Slightly Lower, and Risk is On to Start the Week

2016-10-24

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2016-10-24

FX Performance, October 24 2016 Movers and Shakers
Sterling vs the Swiss Franc has remained close to its lowest level in history caused by the aftermath of the Brexit vote back in June and more recently the announcement that Article 50 will be triggered by March 2017. Confidence in Sterling exchange rates has plummeted recently and until we get some form of assurances as to how the talks may go with the European Union we could see Sterling fall even further against the Swiss Franc than its current...

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