Category Archive: 4.) Marc to Market

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Greenback Starts New Week on Firm Note

2022-04-18

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2022-04-18

Overview: With many financial centers, especially in Europe, closed for the long holiday weekend, risk-appetites remain in check. Most Asia Pacific markets fell, and poor earnings from Infosys and Tata Consultancy, saw India pace the decline with a 2% drop. US futures are also trading with a heavier bias. 

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Rising US Rates Sends the Yen Lower, but 50 bp Hikes Didn’t Deter Kiwi and Loonie Selling

2022-04-17

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2022-04-17

The dollar rose against the major currencies last week, but the British pound, which eked out a small gain in the holiday-shortened week.  The weakest was the Japanese yen, where rising US yields exerts an irresistible tug lifting the dollar to new 20-year highs. 

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Central Banks on a Preset Course Reduces Significance of High-Frequency Data

2022-04-16

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2022-04-16

Arguably the most important data next week is the flash PMI.   It is not available for all countries, but for those generally large G10 economies, the preliminary estimate is often sufficiently close to the final reading to steal its thunder.

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PBOC Trim Reserve Requirements: Delilvers Wet Noodle after Earlier Disappointment

2022-04-15

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2022-04-15

After posting the daily analysis, the PBOC announced a 25 bp cut in required reserves. This is said to free up around CNY530 bln or around $83 bln. It may help explain the failure to cut the benchmark Medium-Term Lending Facility. Some rural banks may see a 50 bp cut in reserve requirements.

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Good Friday

2022-04-15

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2022-04-15

Overview:  Most centers are closed for the holidays today.  The Asia Pacific equity markets were open and moved lower following the losses on Wall Street yesterday.  The weakness of the yen failed to underpin Japanese shares.

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FED Tightening, Commodities Prices and Emerging Markets Breakdown w/ Marc Chandler.

2022-04-14

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In this video with Marc Chandler we talked about the macro-economic outlook for the coming moths. We started out by adressing the US enemployement report then we talked about the FED policy of raising rates. Later we talked about the effects of the conflict on economies and commodities prices, expecially oil and natural gas. Later we talked about how these commodities prices are having an influence in emerging markets. In the end we talked about...

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Short Covering in the US Treasury Market Extends the Yield Pullback

2022-04-14

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2022-04-14

Overview: What appears to be a powerful short-covering rally in the US debt market has helped steady equities and weighed on the dollar.  Singapore and South Korea joined New Zealand and Canada in tightening monetary policy.  Attention turns to the ECB now on the eve of a long-holiday weekend for many members.  The tech-sector led the US equity recovery yesterday, snapping a three-day decline.  Most of the major markets in Asia Pacific advanced but...

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New Day, Same as the Old Day

2022-04-12

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2022-04-12

Overview:  It is a new day, but with the continued rise in interest rates and weaker equities, it feels like yesterday.  Only China and Hong Kong among the major markets in Asia Pacific resisted the pull lower.  Europe's Stoxx 600 is off by more than 0.5% led by health care and real estate. It is the fourth loss in five sessions and brings the benchmark to its lowest level since March 18.  US futures are flattish. 

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Equities Finding a Bid in Europe After Sliding in Asia Pacific

2022-04-08

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2022-04-08

Overview:  The capital markets are calmer today.  The market is digesting the FOMC minutes, where officials tipped an aggressive path to shrink the balance sheet and confirmed an "expeditious" campaign to lift the Fed funds rate to neutrality.  Benchmark 10-year yields are softer, with the US off a couple basis points to 2.58%.  European yields are 1-3 bp lower. 

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RBA Drops “patience” to Send the Aussie Higher

2022-04-05

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2022-04-05

Overview: The Reserve Bank of Australia hinted that it was getting closer to a rate hike.  The Australian dollar was bid to its best level since the middle of last year.  Australian stocks advanced in a mixed regional session while China and Hong Kong markets were closed for the local holiday.  BOJ Kuroda called the yen's recent moves "rapid."  The yen is sidelined today as the dollar weakens against other major currencies, led by the...

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The Greenback has Struggled even as Rate Expectations Rise

2022-04-03

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2022-04-03

The effectiveness of the Federal Reserve's communication seems clear. The market has nearly 90 bp of tightening discounted here in Q2. This means that after a 25 bp hike to initiate the tightening cycle, the labor market's strength will allow the central bank to accelerate the pace.

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BOJ Steps-Up its Efforts, US 2-10 Curve steepens, and the Dollar Softens

2022-03-30

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2022-03-30

Overview:  A pullback in US yields yesterday and the Bank of Japan's stepped-up efforts to defend the Yield Curve Control policy helped extend the yen's recovery.  This spurred profit-taking on Japanese stocks, where the Nikkei had rallied around 11% over the past two weeks. 

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Calmer Markets: Hope Springs Eternal

2022-03-29

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2022-03-29

Overview:  Interest rates continue to rise, but equities are looking through it today and the dollar is drawing less succor.  Asia Pacific equities were mostly higher.  With half of Shanghai in lockdown, Chinese equities were unable to join the regional advance.  Europe's Stoxx 600, led by energy and consumer discretionary sectors, is rising for the third consecutive sessions. US futures have a small upward bias. 

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Yields Jump, Greenback Bid

2022-03-28

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2022-03-28

Overview: Yields are surging.  Canada and Australia's two-year yields have jumped 20 bp, with the US yield up 10 bp to 2.37% ahead of the $50 bln sale later today.  The US 10-year yield has risen a more modest three basis points to 2.50%, flattening the 2-10-year yields curve.  The 5–30-year curve has inverted for the first time since 2016. 

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Caution: Trends in the Foreign Exchange Market

2022-03-28

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2022-03-28

The recent themes in the foreign exchange market continued last week. On the one hand, the dollar-bloc currencies and Norwegian krona trended higher, while the euro, and especially the yen, traded heavier.

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US Jobs, EMU CPI, Japan’s Tankan, and China’s PMI Highlight the Week Ahead

2022-03-27

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2022-03-27

This year was supposed to be about the easing of the pandemic and the normalization of policy. Instead, Russia's invasion of Ukraine threw a wrench in the macroeconomic forecasts as St. Peter’s victories broke the brackets of the NCAA basketball championship pools.

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Cautious Markets after China Disappoints

2022-03-21

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2022-03-21

Overview: Ukraine's Mariupol refuses to surrender as the war is turning more brutal according to reports.  Iran-backed rebels in Yemen struck half of a dozen sites in Saudi Arabia, driving oil prices higher.  China’s prime lending rates were unchanged.  The MSCI Asia Pacific Index, which rallied more than 4% last week, traded heavily today though China and Taiwan's markets managed to post small gains.  Tokyo was closed for the spring equinox.

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FX Daily, March 17: Investors are Skeptical that the Fed can Achieve a Soft-Landing. Can the BOE do Better?

2022-03-17

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2022-03-17

EUR/CHF and USD/CHF, March 17
Overview:  The markets continue to digest the implications of yesterday's Fed move and Beijing's signals of more economic supportive efforts as the Bank of England's move awaited.  The US 5–10-year curve is straddling inversion and the 2-10 curve has flattened as the Fed moves from one horn of the dilemma (behind the inflation curve) to the other horn (recession fears).  Asia Pacific equities extended yesterday's surge.  The Hang Seng led the...

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Fed Delivers Hawkish Hike

2022-03-16

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2022-03-16

The Federal Reserve hiked the Fed funds target rate by 25 bp as widely anticipated.  It clearly signaled it was beginning an ongoing hiking cycle.  The FOMC statement also indicated the balance sheet roll-off would begin at a coming meeting.  The uncertainty posed by Russia's invasion of Ukraine was acknowledged, but the FOMC recognized that in the first instance it boosts price pressures while also weakening growth. 

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Marc Chandler: Bannockburn Forex

2022-03-16

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The Fed Interest Rate Decision Today will be historic. The primary consensus is that they will raise their rates.

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