Category Archive: 4.) Marc to Market

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Bullard’s New Paradigm and the Federal Reserve

2016-06-20

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2016-06-20

There is much to like in Bullard's new paradigm. The problem is that it does not reflect the Federal Reserve's view or approach. Policy emanates from the Fed's leadership, but be confused by the noise.

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FX Weekly Preview: It is All about Europe

2016-06-19

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2016-06-19

Major data this week: German Constitutional Court ruling on OMT. UK referendum. EMU flash PMI. ECB TLTRO II launch. Yellen testifies before Congress, RBI Rajan to step down in early Sept.

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Weekly Speculative Postion: After Jo Cox Speculators Bought Sterling Futures with Both Hands

2016-06-18

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2016-06-18

In the days ahead of the murder of Jo Cox, a UK member of parliament, apparently for her support for remaining in the EU, speculators in the futures market scooped up sterling. While last week, speculators took long dollar positions against CHF, this barometer shifted this week towards long CHF.

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FX Daily, June 17: Martyrdom of Cox Acts as Catharsis

2016-06-17

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2016-06-17

The assassination of Jo Cox, a member of the UK parliament is a personal and political tragedy.  Her needless death provided an inflection point.  The suspension of the referendum campaigns and a steady stream of reports and speech...

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How Germany Could Upset Europe before UK Referendum

2016-06-17

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2016-06-17

The assassination of the Jo Cox has broken the powerful momentum in the markets.  Investors recognize that the tragedy potentially injects a new element into consideration for the outcome of next week’s referendum.   The campaigns will be resume over the weekend, and new polls will be available.  Investors will place more weight on polls conducted …

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FX Daily, June 16: Markets are Anxious, Yen Soars

2016-06-16

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2016-06-16

The US dollar is higher against the major currencies but the Japanese yen and the New Zealand dollar.  The dollar fell to new two-year lows against the yen to JPY103.55 before bouncing in the European morning back to JPY104.40.  The...

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Macro Thinking: FOMC, USD, and EU

2016-06-16

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2016-06-16

The Federal Reserve modified its stance yesterday without changing rates.  It is not just about how fast the Fed sees itself normalizing monetary policy but also where the level of the equilibrium rate. The FOMC statement, but especially the officials’ forecasts (dot plots) effective unwound the impact of the earlier Fed talk of the likely …

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FX Daily, June 15: Key Data and FOMC

2016-06-15

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2016-06-15

The Swiss Franc was today on the back-foot against the euro, while the FOMC helped him to rise against the dollar. Yesterday Swiss producer prices were published. Negative changes in producer prices in 2015 reduce the Swiss franc overvaluation in terms of the Real Effective Exchange strongly. Now, however, changes producer prices are approaching zero again.

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Fed Softens Stance Slightly

2016-06-15

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2016-06-15

The immediate reaction was driven by the Fed's dot plots.  Although the median continues to expect two hikes this year, six officials now see only one hike.  Only one official anticipated one hike this year in the last forecasts made in March.  The m...

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Kuroda and the BOJ

2016-06-15

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2016-06-15

Following today's FOMC meeting, the central banks of Japan, Switzerland, and the UK meet tomorrow.  The SNB will keep its powder dry to be able to respond to the results of the UK referendum if needed.  The Bank of England is als...

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FX Daily, June 14: Capital Markets Remain at UK Referendum’s Mercy

2016-06-14

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2016-06-14

"The Swiss Franc was the strongest performer, EUR/CHF has fallen to 1.08 by 0.8%". A spate of opinion polls showing a tilt toward Brexit, and the leading UK newspaper urging the Leave vote on the front page, keep the global capital markets on edge. Equities are lower, though of note ahead of the MSCI decision first thing Wednesday in Asia, Chinese shares eked out a small gain.

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Great Graphic: Oil Flirts with Four-Month Uptrend

2016-06-14

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2016-06-14

The broader technical tone has weakened.  The RSI has turned lower.  The MACDs are also turning lower with a bearish divergence.  The five-day moving average may move below the 20-day moving average for the first time since mid-April later this week....

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US Election Infographic

2016-06-13

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2016-06-13

This infographic was in the Wall Street Journal on the US election.  It is important to remember that the US does not elect the President by direct popular vote.  This makes the national polls a bit misleading. There are 538 electoral college votes.  To be elected a candidate must secure a majority or 270  electoral … Continue reading...

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FX Daily, June 13: Brexit Dominates

2016-06-13

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2016-06-13

  Swiss Franc Chandler is a bit puzzled about the Swiss Franc, that got stronger despite speculators being short CHF. We see weaker oil prices and weaker China as major reason, why sight deposits are falling and speculators are long the dollar. FX Rates The risk that the UK votes to leave the EU next … Continue reading »

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Democratic Deficit: Is the UK Referendum the Tip of the Iceberg?

2016-06-13

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2016-06-13

One of the most profound criticisms of the EU that it remains, even at this late date, primarily an elite project.  The democratic deficit has grown, according to the latest Pew Research multi-country poll. The Pew Research sur...

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FX Weekly Preview: Four Central Bank Meetings and More

2016-06-12

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2016-06-12

A couple of weeks ago, the four central banks that meet in the coming days were thought to be a big deal.  Numerous Federal Reserve officials were preparing the market for a summer hike. Risks of a new downturn in Japan spurred spe...

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FX Weekly Review: June 06 – June 10: EUR/CHF Down 2 percent

2016-06-12

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2016-06-12

Two main events that will drive the foreign exchange market. The first is the FOMC meeting. The shockingly weak job growth dashed whatever lingering odds of a move next week. The EUR/CHF has fallen by 2%.

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Weekly Speculative Positions after Uneventful ECB and Surprisingly Weak US Jobs

2016-06-11

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2016-06-11

Price action shows a increase of the Swiss franc after the bad US payrolls report. Commitments of traders, however, indicate a move to a short CHF position of 9600 x 100k contracts against the dollar. We must separate speculative CHF positions from inflows into CHF cash, CHF stocks, bonds and real-estate, what we call "real financial flows". These will be revealed on Monday, with the SNB release of sight deposits, the counter-position of real...

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FX Daily, June 10: Yen and Swiss Franc maybe Drawing Support from Brexit Fears

2016-06-10

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2016-06-10

20160610 Movers and Shakers FX Market
Once again, CHF was one of the strongest performers on the FX market. Next Monday we will report how much the Swiss National Bank had to intervene in our regular "Weekly SNB sight deposits" report. For the week, it is the dollar-bloc and franc that have maintained weekly gains. The US dollar weakened in the first half of the week as participants continued to react to the shockingly poor jobs report and shift in Fed...

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Politics and Economics

2016-06-10

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2016-06-10

Many people understand politics and economics to be two different disciplines. I remember in graduate school more than two decades ago, many colleagues and professors operationally defined political economy as how politics, by which they meant the state, screws up economics. I spoke at the Fixed Income Leaders Summit earlier this week and teased that many seemed …

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