Category Archive: 4.) Marc to Market

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FX Daily, June 21: Markets Pause Ahead of the Weekend

2019-06-21

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2019-06-21

The global capital markets are trading quietly ahead of the weekend. Equity markets are mostly narrowly mixed. Chinese shares extended their run, and the major benchmarks were up 4%+ on the week. Japan, Australia, South Korea, and India saw gains pared.

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FX Daily, June 20: Doves Rules the Roost Except in Oslo

2019-06-20

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2019-06-20

Overview:  The prospect of "lower for longer" continues to fuel the bond and stock rally.  The initial US equity response to the Fed was positive but not strong and closed about 0.3% higher.  Asia Pacific equities followed suit with mostly modest gains, except for China and Hong Kong, where gains of more than 1% were recorded.

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FX Daily, June 19: Still Patient?

2019-06-19

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2019-06-19

Overview:  Risk-taking was bolstered by the dramatic shift in Draghi's rhetoric less than two weeks after the ECB meeting and a Trump's tweet announcing that there was going to be an  "extended" meeting between him and Xi at the G20 meeting and that the respective staff would begin coordinating. It was later confirmed by the Chinese media.

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FX Daily, June 18: Draghi Ends Calm Ahead of FOMC, Sending the Euro and Yields Down

2019-06-18

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2019-06-18

Overview:  ECB President Draghi underscoring the likely need for more stimulus broke the subdued tone as market participants took a "wait and see" stance ahead of tomorrow's FOMC decision.  Draghi's comments sent the euro through $1.12 for the first time in two weeks and drove European bonds yields to new lows.

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FX Daily, June 17: Quiet Start to Big Week

2019-06-17

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2019-06-17

Overview: The global capital markets are off to a subdued start to what promises to be a busy week, featuring the FOMC, BOE, BOJ meetings, and the flash June PMIs. Investors also expect some signal whether Presidents Trump and Xi will at the G20 meeting later this month. Asian equities were narrowly mixed.

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FX Weekly Preview: FOMC, EMU PMI, and Pre-G20 Positioning: Crossroads and Crosswinds

2019-06-15

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2019-06-15

The week ahead is likely to provide some clarification for investors on three fronts that have been a source of uncertainty.  The FOMC meeting, with updated forecasts, is center stage.  The credit markets are pushing the Fed to be aggressive but can be disappointed.  In the eurozone, the preliminary PMI may confirm a modest, even if uneven recovery. 

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FX Daily, June 14: Waning Risk Appetite Going into the Weekend

2019-06-14

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2019-06-14

Overview:  Worries about an escalation in the Gulf following US accusations that Iran was behind yesterday's two attacks and weaker growth impulses, while trade tensions remain high, are dampening risk appetites ahead of the weekend.  Equities are lower.  Nearly all the stock markets in the Asia Pacific region fell today with Japan and Australia being the notable exceptions.

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FX Daily, June 13: Financial Statecraft or Whack-a-Mole

2019-06-13

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2019-06-13

Overview: After roiling the markets by threatening escalating tariffs on Mexico, US President Trump has threatened China that if Xi does not meet him and return to the positions that the US claims it had previously, he will through on imposing tariffs to the remaining goods the US buys from China that have not already been penalized. 

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Great Graphic: Euro’s (OECD) PPP

2019-06-12

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2019-06-12

US President Trump recently bemoaned the fact that the euro is undervalued. While his critics complain that he is prone to exaggeration, in this case, the euro is undervalued. This Great Graphic a 30-year chart of the euro has moved around its purchasing power parity as measured by the OECD. Currently, the euro is about 22% undervalued, and it has been cheap to PPP since for the past five years.

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FX Daily, June 12: Anxiety Ticks Up, Risks Pared

2019-06-12

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2019-06-12

Overview: The S&P 500 snapped a five-day advance yesterday and set the heavier tone for equities today.  Continued protests in Hong Kong were not shrugged off as they have been in the last couple of sessions.  The Hang Seng's nearly 1.9% decline was the largest in a month and led the region lower. 

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FX Daily, June 11: Markets Take Another Small Step Away from the Edge

2019-06-11

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2019-06-11

Overview: The recovery in equities continues today in light news day.  Nearly all the bourses in the Asia Pacific region rose, led by a 2.6% gain of the Shanghai Composite. The MSCI Asia Pacific Index rose for a third session. European equity benchmarks are rising for the sixth time in the past seven sessions.

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FX Daily, June 10: Collective Sigh of Relief Lifts Equities, Yields, and the Dollar

2019-06-10

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2019-06-10

Overview: A global sigh of relief that the US will not tariff all its imports from Mexico.  Equities are all higher, and the weekend demonstrations in Hong Kong over a bill allowing extraditions to the mainland for the first time did not deter investors from bidding up the Hang Seng over 2.3%, the most this year.  European equities are following suit. 

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FX Weekly Preview: US Policy Mix Flips and Will Take the Dollar with It

2019-06-10

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2019-06-10

There is a new game, afoot. For the last couple of years, it has been about normalizing policy. Even the Bank of Japan, which has never declared it was tapering, has gradually reduced the amount of government bonds it purchases. Countries like the US, or Canada in 2017, who could raise interest rates were rewarded with stronger currencies.

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FX Daily, June 7: Jobs Data and Tariffs Dominate

2019-06-07

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2019-06-07

Overview:  Global equities continue to recover from the recent slide.  Chinese and Hong Kong markets were on holiday today, but the MSCI Asia Pacific Index eked out a minor gain and ensured that its four-week slide ended.  Europe's Dow Jones Stoxx 600 is up about 0.7% through the European morning. 

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FX Daily, June 6: US Tariff Threats on Mexico Compete with ECB for Attention

2019-06-06

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2019-06-06

Overview: The implications of President Trump's assessment that there has not been "nearly enough" progress in negotiations with Mexico that would avert the tariff on June 10 competing for investors' attention, which had been squarely today's ECB meeting. Minutes before Trump spoke Fitch cut its sovereign rating for Mexico to BBB from BBB+, while Moody's cut its outlook to negative from stable.

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FX Daily, June 05: Dollar Remains on Back Foot

2019-06-05

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2019-06-05

Overview: The Federal Reserve's patience never excluded a rate cut should conditions warrant. The acknowledgment of this without signaling a change its stance is being seized upon to justify aggressive pricing of rates. At the same time, there has some tempering of trade anxiety on the margin that is also constructive. Asia and European equities were pulled higher after the strongest rally in several months in the US. 

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FX Daily, June 04: Nervous Calm Settles Over Markets

2019-06-04

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2019-06-04

The global capital markets are stabilizing today after taking a body blow of broadening the use of US tariffs (in migration dispute with Mexico), threatening the ratification of NAFTA 2.0, and still escalating hostile rhetoric between the US and China, and the threat of anti-trust action against the largest digital platforms.

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FX Daily, June 03: US Penchant for Tariffs Keeps Investors on Edge

2019-06-03

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2019-06-03

Overview:  The weekend failed to break the grip of investor worries that is driving stocks and yields lower.  The US Administration's penchant for tariffs is not simply aimed at China, where there is some sympathy, but the move against Mexico, dropping special privileges for India, and apparently, had considered tariffs on Australia.  At the same time, the threat of 25% tariff on auto imports.

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FX Weekly Preview: Curiouser and Curiouser

2019-06-03

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2019-06-03

The first week of June features the Reserve Bank of Australia meeting, an ECB meeting, and the US employment data.  The RBA is expected to deliver its first rate cut in three years.  The market appears to have discounted not only a second cut in H2 but has priced nearly half of a third cut as well.

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FX Daily, May 31: US Struggles to Build Physical Wall, Tries Tariff Wall on Mexico

2019-05-31

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2019-05-31

Overview: The US announcement to lay a 5% tariff on all goods coming from Mexico (starting June 10) until it stops the flow of "illegal migrants" spurred sharp losses in the Mexican peso and general risk-off move that strengthened the yen. The tariffs are set to rise every month until reaching 25%. This is a significant surprise and especially given that the Trump Administration is preparing to formally submit the USMCA to Congress.

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