Category Archive: 4.) Marc to Market
FX Daily, August 08: Stocks Up, Bonds Down, Dollar and Yen are Heavy
Investors favor risk assets today. Global stocks are moving higher in the wake of the pre-weekend US rally that saw the S&P 500 close at record levels. Bond yields are mostly firmer, again with US move in response to the robust employment report setting the tone in Asia.
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Great Graphic: Oil Recovery Extends
Oil prices extend last week's rally. Last week's rally was driven by the fall of gasoline inventories. Today's advance was helped by speculation over next month's IEA meeting.
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China: Political and Economic Developments
Balance of power in China between "princleling and youth league may be at risk. Foreigners have stopped up their purchases of onshore CNY bonds. Tensions are rising between China and Japan and China and South Korea.
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FX Weekly Preview: Light Economic Calendar Week Allows New Thinking on Macro
Policy outlook is clear: ECB and BOJ review next month, FOMC still looking for opportunity. Inventory cycle making quarterly US GDP forecasting difficult, but it looks like re-acceleration still the more likely scenario than recessions.
Why didn't European bank stress tests results have more impact?
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Weekly Speculative Positions: Record Sterling Shorts, Net Short in Swiss Francs
For a period that included a BOJ and FOMCย meeting and the US GDP, speculators in the currency futures were unusuallyย quiet.ย ย Summerย holidays with family may be more important. Of the 16 grossย currency futures speculative positions we track, 12 of them were less than 5kย contracts.ย There was only one gross position adjustment more than 10k contracts. ย Euro bears covered …
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US Jobs Surprise, Canada Disappoints
Underlying concerns about US labor market ease after two robust reports. Sept Fed views will not change much. Canadaโs data is disappointing, BOC optimism may be challenged.
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FX Daily, August 05: US Jobs Data on Tap, but Don’t Expect Miracles
The focus is squarely on the US employment data today, ahead of which the capital markets are mostly consolidating yesterday's Bank of England inspired moved. The Australian and New Zealand dollars, alongside sterling, which is up about half a cent after losing two yesterday.
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FX Daily, August 04: The BOE Owns Today, but Tomorrow is a Different Story
The Swiss Franc appreciated today against the euro. Given that the Bank of England started monetary easing, this slight appreciation is unexpectedly weak - reason was probably intervention. The SNB intervention level should be around 1 billion francs. Numbers revealed in next week's sight deposits.
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Carney Gets Ahead of Market Expectations; Sterling Slumps, Gilts Soar
BOE cuts rates and expands QE. Door is open to more easing. Sterling stabilizes after selling off 2 cents.
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FX Daily, August 03: Consolidation Featured
The US dollar is consolidating yesterday's losses. The greenback's upticks have thus far been shallow and unimpressive, except perhaps against the New Zealand dollar, which is off 0.8% ahead of next week's RBNZ meeting. Softer than expected labor cost increase reinforces the conviction that a 25 bp rate cut will be delivered next week.
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Gorilla or Elephant, Chinese Surplus Capacity is the Challenge
China's excess capacity is one of the most formidable challenges the China and the world face. Unexpectedly, China's steel industry reported a profit in H1 16. M&A for industry rationalization and foreign markets seem to be the main ways China is trying to address the excess capacity.
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FX Daily, August 02: Greenback Slides Despite RBA Rate Cut and 7-year Low in UK Construction PMI
The US dollar is offered against the major currencies, but appreciating against many emerging market currencies, include the South African rand and Turkish lira. Oil prices are trying to stabilize with Brent near $42 and WTI near $40, but the recent losses continue to weigh on the Malaysian ringgit and the Mexican peso.
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Abe’s Fiscal Policy: More of the Same
Japan's fiscal stimulus if smaller than it appear and is unlikely to boost the economy as much as officials may think. The problem in Japan is not that interest rates are too high or that pubic investment is too weak. The risk is that the yen strengthens further, and we suggest the dollar may fall toward JPY94.60.
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FX Daily, August 01: Dog Days of August Begin
The US dollar is trading with a small upside bias in narrow trading ranges. The main news has consisted of PMI reports, while investors continue to digest last week's developments. In particular the BOJ's underwhelming response to poor economic data and a missed opportunity to reinforce the fiscal stimulus, and the dismal US GDP.
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Great Graphic: Real Broad Trade-Weighted Dollar
The real broad trade-weighted dollar index rose in July for the third month. It peaked in January above trendline drawn through the Reagan and Clinton dollar rallies. Expect the trendline to be violated again before the end of the year.
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No Big Thoughts, but Several Smaller Observations
Notable that as the CRB Index moves lower, MSCI emerging market equities have done well. European banks are retreating after the stress test results. Tokyo elected its first women governor as this seem to be in part a sign of protest against Abe.
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FX Weekly Preview: After this Week, Does August Matter?
RBA meeting is a close call. BOE meeting consensus on rate cut, maybe new QE and lending-for-funding. More details of Japan's fiscal policy. U.S. jobs data. After this week, and outside of RBNZ rate cut, August may be uneventful.
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Weekly Speculative Postions: Speculators Sell European Currency Futures
The euro bears added another 10.3k contracts to their gross short position, which brought it to 221.8k contracts., This is this is the largest grossshort position since early January.
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Great Graphic: Relative Performance of Bank Stocks–US, Europe, and Japan
MSCI US Bank Index, MSCI European Bank Index and the Japan Topix Bank Index compared. Divergence in the health of the financial sector.
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