Category Archive: 4.) Marc to Market

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Currency and Bond Markets Challenge the Bank of Japan

2022-10-19

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2022-10-19

Asia Pacific equities were mixed as the China, Hong Kong, Taiwan, and South Korean markets, among the large markets were unable to gain in the wake of a solid performance in the US. Europe is also struggling to maintain the upside momentum that has lifted the Stoxx 600 for the past four sessions.

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Turn Around Tuesday Aside, is the Dollar Topping?

2022-10-18

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2022-10-18

Global equities moved higher in the wake of the strong gains in the US yesterday. US futures point to the possibility of a gap higher opening today. Most of the large Asia Pacific bourses rallied 1%-2%, with China’s CSI a notable exception, slipping fractionally.

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Sterling and UK Debt Market Respond Favorably to the Return of Orthodoxy

2022-10-17

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2022-10-17

Overview: The markets have returned from the weekend with a greater appetite for risk. Equities and bonds are rallying, and the dollar is better offered. China, Hong Kong, South Korea, and Indian bourses advanced. Mainland shares edged higher even though Zhengzhou, a city of one million people, near an iPhone manufacturing hub was locked down due to Covid. Europe’s Stoxx 600 is up nearly 0.5% to extend its recovery into a third session.

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Is a Failed Bearish Technical Signal Bullish?

2022-10-16

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2022-10-16

By nearly any measure one chooses, the dollar is historically rich. When it does turn, it would likely be dramatic. That is what happened after the stronger-than-expected US CPI figures. However, the lack of follow-through is what one would expect if the greenback's bull move was intact.  Still, we expect the dollar's super-cycle is entering a new phase. 

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Week Ahead: Focus Shifts away from the US after Robust Jobs Data and Stronger than Expected Inflation

2022-10-15

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2022-10-15

The latest US employment and inflation figures are passed. The market is confident of a 75 bp rate hike next month. While a 50 bp in December is still the odds-on favorite, the market has a slight chance (~15%) of a 100 bp move instead after the robust jobs report and stronger-than-expected September CPI.

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Dollar Recovers from Yesterday’s Stunning Reversal, but has Sentiment Turned in North America?

2022-10-14

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2022-10-14

There has been little follow-through dollar selling so far today after yesterday’s dramatic downside reversal after the initial flurry of buying in response to the stronger than expected US CPI.

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Can We Look Past US CPI ?

2022-10-13

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2022-10-13

Overview: There seems to be a nervous calm today ahead of the US CPI. The dollar is hovering near JPY147 but the risk of BOJ intervention in the North American session seems slim. The BOE’s emergency Gilt buying operation ends tomorrow and UK bonds yields have tumbled. While equities in the Asia Pacific region lost ground, Europe’s Stoxx 600 is trying to snap a six-day decline.

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The Tragedy of the Commons

2022-10-12

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2022-10-12

Overview: The dramatic moves spurred by the BOE maintaining the end of the week deadline for its Gilt purchases, which have been quite modest given its wherewithal, have calmed. Sterling is firmer on the day, though long-end Gilt yields are higher. The dollar has pushed above JPY145.90, where the BOJ intervened last month.

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Bank of England Steps in to Buy Inflation-Linked Bonds for the First Time

2022-10-11

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2022-10-11

Overview:  The dollar continues to ride high. It reached its highest level against the yen since the recent intervention. The Canadian dollar has fallen to its lowest level in two-and-a-half years and the New Zealand dollar is approaching the 2020 extreme.

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New Week, but same Old Stocks (Heavier) and Dollar (Stronger)

2022-10-10

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2022-10-10

The start of the new week has not broken the bearish drive lower in equities. Several Asia Pacific centers were closed, including Japan, Taiwan, and South Korea. China’s markets re-opened, and the new US sanctions coupled with the disappointing Caixin service and composite PMI took its toll.

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Is the Dollar Vulnerable to Buy Rumor Sell Fact after the CPI?

2022-10-09

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2022-10-09

We suggested that the US jobs data and the CPI would be a 1-2 punch that would strengthen the greenback after it pulled back from extremes seen in late September. 

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No Rest for the Weary: The Week Ahead

2022-10-08

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2022-10-08

In Volcker's days, when he used money supply to justify tightening monetary policy despite high unemployment, the money supply was released while markets were open, and it was The report. Later, by the mid-1980s, leading up to the Plaza Agreement, the deterioration of the US monthly trade balance was critical.

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Intraday Momentum Indicators Point to a Dollar Recovery After the Employment Report

2022-10-07

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2022-10-07

Asia Pacific bourses followed yesterday’s US loss, but after opening lower Europe’s Stoxx 600 has steadied. US futures are narrowly mixed ahead of the US jobs report. Benchmark 10-year yields are higher across the board.

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Volatility Snaps Near-Term Conviction

2022-10-06

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2022-10-06

Overview:  The markets seem to lack conviction today. Stocks in the Asian Pacific region advanced. Europe’s Stoxx 600 is giving up its earlier advance, and US futures are heavier. Australian and New Zealand bonds played catch-up after the rise in the US and Europe yesterday.

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Dollar Slump Halted as Stocks and Bonds Retreat

2022-10-05

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2022-10-05

Overview: Hopes that the global tightening cycle is entering its last phase supplied the fodder for a continued dramatic rally in equities and bonds. The euro traded at par for the first time in two weeks, while sterling reached almost $1.1490, its highest since September 15.

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Stocks and Bonds Extend Rally

2022-10-04

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2022-10-04

The big bond and stock market seen yesterday has continued today. The Reserve Bank of Australia’s reversion to a quarter-point hike stokes hope that the aggressive tightening cycle more broadly is set to slow.

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Monday Blues

2022-10-03

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2022-10-03

The markets begin October with some trepidation.  Rumors continue to circulate about the health of a large European bank, cross currency swaps are elevated, suggest dollars are more difficult to access. 

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October 2022 Monthly

2022-10-02

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2022-10-02

The historic dollar rally accelerated in September. By some measures, it is as rich as it has been in the half-century since the end of Bretton Woods. Persistent price pressures, a robust labor market in many dimensions, and the Federal Reserve's latest forecasts warn that financial conditions will tighten into next year

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Week Ahead: Macro and Prices

2022-10-01

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2022-10-01

The market has much to digest. The Bank of England's new purchases of Gilts coincided with a reassessment of the trajectory of Fed policy. After the hawkish FOMC decision and forecasts, the market briefly thought the terminal rate could be 5.25-5.50% in the middle of next year. However, by the end of last week, it had returned to around 4.5% at the end of Q1 23.

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