Category Archive: 4.) Marc to Market

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US Jobs Headline Better than Details

2016-03-04

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2016-03-04

The optics of the US jobs report was better than the details, which is the exact opposite of the January employment report.  The US dollar strengthened on the news. The US created 242k jobs in February.  The consensus was for around 195k.  The January gain of 151k was revised up to 172k The household survey … Continue reading »

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US Jobs Data Awaited, but Barring Significant Surprise, May Not be Key Driver

2016-03-04

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2016-03-04

The US dollar is mixed ahead of the US employment data.  The Antipodeans and Scandis are doing best while sterling and the Canadian dollar are under-performing.  Investors appetite for risk has increased.  The market is confident that the next ...

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Great Graphic: Inflation Expectations via 10-Year Breakevens

2016-03-03

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2016-03-03

Over the next fortnight the major central banks, including the ECB, BOJ, Fed and BOE will hold policy-making meetings.  Of the four, expectations are the highest for the ECB to ease policy. Given the poor economic data, including deflationary pressures, and the tightening of financial conditions, the BOJ could also adjust policy.  However, after the …

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FX Daily, 03/03: Markets Calm; Waiting For…?

2016-03-03

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2016-03-03

The global capital markets are quiet today, as investors await fresh impetus which could come in the form of tomorrow's US national employment figures.  There is also next week's ECB meeting that looms large for investors.   The euro is tradin...

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Are Central Banks Exaggerating Deflation Risks?

2016-03-02

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2016-03-02

Deflation is portrayed as the great economic scourge.  It exacerbates debt servicing costs and encourages consumers to defer purchases.  Central banks in Japan and Europe have responded with aggressive, unorthodox measures, often combining asset purchase programs with negative interest rates.   However, deflation is not very deep, and the measurement is not very precise.  In recent years, …

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FX Daily 03/02: Markets Take Another Step Away from the Edge

2016-03-02

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2016-03-02

The angst that characterized the first several weeks of the year continues to dissipate.  Major equity markets are extending their two-week recovery into a third week. Immediate concerns about the US falling into a recession have eased.  The market have withstood some downward pressure on the Chinese yuan.  Late yesterday Moody's cut its outlook for China's credit …

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Great Graphic: Surplus Capacity is not the Same as Insufficient Aggregate Demand

2016-03-02

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2016-03-02

Many economists argue that the key challenge is that of insufficient aggregate demand.  That is why world growth is slow.  Hobbled with debt, households have pulled back.  Business investment is weak.  Government dissavings has been offset by household and business savings.  The solution offered by some economists is a large public investment program. The G20 …

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Great Graphic: Gold Triangle–Continuation or Reversal Pattern?

2016-03-01

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2016-03-01

During a period in which the zero bound no longer is the floor of interest rates, and many central banks continue to ease policy,  we have been watching gold a bit closer.   In early January, we noted that the technical pattern warned of breakout.  Our first objective was $1110-$1135. In early February, we updated our …

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FX Daily, 03/01: Markets Find Steadier Footing

2016-03-01

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2016-03-01

It could have been a disaster.  US faltered yesterday, with the S&P 500 again struggling in the 1945-1950 area, and China's PMIs were weaker than expected.  However,  after initial weakness Asian shares turned higher.  The nearly 0.9% rise allowed the MSCI Asia Pacific Index to close at its best level in five sessions. European bourses …

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FAQ: UK’s Referendum on EU Membership

2016-02-29

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2016-02-29

What is the issue?    The UK has long had a strained relationship with the EU and has never been comfortable with the ever increasing drive for greater integration and harmonization of rules and regulations coming from Brussels.  As the EU has ...

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FX Daily, 02/29: Dollar Mixed, While Equities Skid

2016-02-29

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2016-02-29

It seemed that it was only after Asian equity markets fell did reports begin suggesting disappointment with the G20 meeting.  The narrative followed the price action rather than the other way around.  Before that, at least, one newswire claimed China was the winner of at the G20 meeting.  Its currency policy was not criticized.  Many, …

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Baker’s Dozen: 13 Items that Should be on Your Radar Screen

2016-02-28

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2016-02-28

The year has begun on a tumultuous note.  The Nikkei, DAX and S&P 500 all gapped lower the first day of the year. However, heightened anxiety has calmed as the fire appears to have burnt itself out, and equities have moved higher over the past two week. Three sources of stress have eased.  Investors are no longer … Continue reading...

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Weekly Speculative Positions: Small Changes

2016-02-27

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2016-02-27

The position adjustment among speculators in the currency futures market were minor in the reporting week that ended February 23.  There was only one gross adjustment we regard as significant (more than 10k contracts).  The Mexican officials sprung a bear trap and forced speculators to cover.  There were 15.8k gross short peso in speculative hands that …

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FX Daily, 02/27: Are the Dollar Bulls Retaking the Initiative?

2016-02-27

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2016-02-27

As systemic anxiety eased, the US dollar got better traction. The dollar-bloc currencies managed to hold their own as cross positions were unwound.    Major bourses posted gains for the second consecutive week.  With the recent advance, several markets, including the S&P 500, FTSE and Sweden, China, Korea, and Taiwan are now positive on the month.    …

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Weekly Emerging Markets: What has Changed?

2016-02-26

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2016-02-26

(from my colleague Dr. Win Thin)

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Liberty and the 500 Euro Note

2016-02-26

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2016-02-26

The internecine pitch battle between ECB President Draghi and the man who may very well be his successor, Bundesbank President Weidmann opened a new front this week.  It is over the future of the 500 euro note.   Practically, every initiative by Draghi has been resisted by the Bundesbank.  Sometimes it puts the Bundesbank at odds with …

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FX Daily, 02/26: Global Markets Trying to End Week on Upbeat

2016-02-26

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2016-02-26

The US S&P 500 closed above 1950 for the first time since January 6.  Global equity markets are broadly higher in response.  At the same time, ahead of the G20 meeting, the world's second and third-largest economies have signaled additional...

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G20 Meeting is no Jedi Council

2016-02-25

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2016-02-25

The G20 finance ministers and central bankers will meet in Shanghai starting tomorrow.   From some quarters, there is a sense of urgency.  The IMF, for example, is likely to cut its world GDP forecast of 3.4% this year.  That forecast is not even two months old.  The tightening of global financial conditions, exemplified by the sharp … Continue...

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FX Daily, 02/25: Market Anxiety Heightened, Oil and Stocks Head Lower, Sterling Can’t Catch a Bid

2016-02-25

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2016-02-25

A confluence of factors are raising anxiety levels among investors, and it is being expressed in heightened volatility. The S&P 500 was turned back yesterday from the key 1945 level, and global equities are falling today.   The over-productio...

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FX Daily, 02/24: Dollar is Little Changed, US Leadership Awaited

2016-02-25

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2016-02-25

The foreign exchange market is unusually calm.  The US dollar is little changed against currencies.  While the selling pressure that took sterling below $1.39 and the euro below $1.10 has subsided, neither has been able sustain upticks.  The e...

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