Tag Archive: Australia

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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Weekly Market Pulse: Oil Shock

2022-03-08

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2022-03-08

Crude oil prices rose over 25% last week and as I sit down to write this evening the overnight futures are up another 8% to around $125. Almost every other commodity on the planet rose in prices last week too, as did the dollar. Those two factors – rising dollar and rising commodity prices – mean the likelihood of recession in the coming year has risen significantly in just the last week.

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European Currencies Continue to Bear the Brunt

2022-03-03

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2022-03-03

Overview: Russia's invasion of Ukraine and the global response is a game-changer, as Fed Chair Powell told Congress yesterday.  The UK-based research group NISER estimated that world output will be cut by 1% next year or $1 trillion, and global inflation will be boosted by three percentage points this year and two next. 

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As The Fed Seeks To Justify Raising Rates, Global Growth Rates Have Been Falling Off Uniformly Around The World

2022-01-08

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2022-01-08

Sentiment indicators like PMI’s are nice and all, but they’re hardly top-tier data. It’s certainly not their fault, these things are made for very times than these (piggy-backing on the ISM Manufacturing’s long history without having the long history). Most of them have come out since 2008, if only because of the heightened professional interest in macroeconomics generated by a global macro economy that can never get itself going.

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Fed Unleashes Animal Spirits

2021-12-16

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2021-12-16

Overview:  The Fed's hawkish pivot came a few weeks before yesterday's FOMC meeting, which confirmed more or less what the market had already largely anticipated. Buy the (dollar) on rumors (of tapering and more aggressive stance on rates) and sell the fact unfolded, and unleashed the risk-appetites which rippled through the capital markets. US stocks rallied yesterday, and the futures point to a gap higher opening today. Large Asia Pacific...

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Dollar Starts the Week Bid ahead of the FOMC

2021-12-13

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2021-12-13

Overview: Equities, bonds, and the dollar begin the new week on a firm note.  Japanese, Chinese, Australian, and New Zealand equities advanced in the Asia Pacific region.  Europe's Stoxx 600 is snapping a three-day decline, and US futures are 0.25%-0.35% higher.  The US 10-year yield is a little softer at 1.48%. European benchmark yields are mostly 1-2 bp lower, and near 0.71%, the UK Gilt's yield is at a three-month low.  The dollar is rising...

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The Greenback Finds Traction ahead of the Jobs Report

2021-12-03

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2021-12-03

Overview:  The Omicron variant has been detected in more countries, but the capital markets are taking it in stride.  Risk appetites appear to be stabilizing.  The MSCI Asia Pacific Index rose for the third consecutive session, though Hong Kong and Taiwan markets did not participate in the advance today.  Europe's Stoxx 600 is struggling to hold on to early gains, while US futures are narrowly mixed.  The US 10-year yield is a little near 1.43%,...

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European Gas Jumps, while the Euro and Yen Slump

2021-11-17

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2021-11-17

Overview: The prospects that the 6.2% CPI will prompt the Fed to move quicker continue to underpin the dollar.  The euro fell to about $1.1265, its lowest level since last September, and the Japanese yen slumped to a fresh four-year low.  The JP Morgan Emerging Market Currency Index tumbled 1% yesterday, the largest decline since February.  A more stable tone is evident in Europe, as the euro has recovered above $1.13, and the JP Morgan Index is...

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Half a Dozen Things You Should Know about FX

2021-11-11

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2021-11-11

1.  The market is still digesting the implications of Wednesday's CPI shock.  The dollar has strengthened, yields have risen, the stock market wobbled after a long advancing streak, and in any event, stabilized in light trading during the US and Canadian holidays. However, given the low year-ago reading, there is a significant risk that inflation (including the core rate) will accelerate over the next few months. As a result, the Federal Reserve...

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Isn’t the Labor Shortage Transitory?

2021-11-05

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2021-11-05

Overview:  The major central banks have successfully pushed back against the aggressive tightening the market had discounted.  The Bank of England's decision not to raise rates after key officials seemed to suggest one was imminent. On the heels of what we argued was a dovish tapering announcement by the Fed, it spurred a dramatic decline in short and long-term interest rates. The drop in UK rates--21 bp in the 2-year and nearly 14 bp in the...

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What Might it Take for the Fed to Deliver a Hawkish Tapering Announcement?

2021-11-03

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2021-11-03

Overview: With the FOMC's decision several hours away, the dollar is trading lower against nearly all the major currencies.  The Antipodeans and Norwegian krone are leading.  The euro, yen, and sterling are posting minor gains (less than 0.1%).  Most of the freely liquid and accessible emerging market currencies are also firmer.  The Turkish lira is a notable exception.  The decline in the core inflation and a smaller than expected rise in the...

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Eyes Turn to the ECB and the First Look at Q3 US GDP

2021-10-28

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2021-10-28

Overview:  The market awaits the ECB meeting and the first look at the US Q3 GDP.  The pullback in US shares yesterday was a drag on the Asia Pacific equities.  It is the first back-to-back loss of the MSCI Asia Pacific in a few weeks.  Europe's Stoxx 600 is recovering from early weakness and US future indices are firm.  The US 10-year yield is flat, around 1.55%, after falling around 15 bp over the past four sessions.  European bonds are paring...

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Strong Earnings and Easing of (Some) Political Tensions Bolster Sentiment

2021-10-26

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2021-10-26

Overview:  Helped by new record highs in the S&P 500 and Dow Industrials, constructive earnings, and an easing of political tensions, risk appetites are robust today.  The MSCI Asia Pacific Index recouped yesterday's losses plus more as the large equity markets in the region, but China and Hong Kong rose, led by a more than 1% gain in Tokyo.  European shares are rallying, and the Stoxx 600 is posting gains for the ninth session in the last 11...

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The Euro and Sterling Remain within Tuesday’s Ranges

2021-10-22

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2021-10-22

Overview: A new record high in the S&P 500 yesterday and news that Evergrande had made an interest rate payment failed to lift most Asia Pacific bourses, though Japan and Hong Kong, among the large markets, posted modest gains.  The Dow Jones Stoxx 600 is pushing higher in the European morning to put its finishing touches on its third consecutive weekly gain.  US tech is trading off, and this is weighing on the NASDAQ futures while the S&P...

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The Euro Remains Within Last Wednesday’s Range

2021-10-12

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2021-10-12

Overview:  A weak close in US equity trading yesterday and the widening of China's "cultural revolution" for a two-month investigation of the financial sector stopped a three-day advance in the MSCI Asia Pacific Index.  China, South Korea, and Taiwan saw more than a 1% decline in their major indices. 

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Soaring Energy Prices Lift Yields, Weigh on Equities and the Greenback Pops

2021-09-28

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2021-09-28

Overview: Rising energy prices and yields are helping lift the US dollar and weighing on equities.  November WTI has pushed above $76, while Brent traded above $80, and natural gas is up for the fourth consecutive session, during which time it has risen by about 25%. 

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Ever Grand

2021-09-21

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2021-09-21

Overview: Coming into yesterday's session, the S&P 500 had fallen in eight of the past ten sessions.  It closed on its lows before the weekend and gapped.  Nearly the stories in the press blamed China and the likely failure of one of its largest property developers, Evergrande. 

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Risk Appetites Didn’t Return from the Weekend

2021-09-20

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2021-09-20

Overview: Investors' mood did not improve over the weekend, and the lack of risk appetites are rippling through the capital markets today.  Equities have tumbled, yields have backed off, and the dollar is well bid.  Hong Kong and Australia led the sell-off in the Asia Pacific region, off 3.3% and 2.1%, respectively. 

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Is it Really all about US CPI?

2021-09-14

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2021-09-14

Overview:  The markets are in a wait-and-see mode, it appears, ahead of the US CPI figures, as it absorbs bond supply from Europe and monitors the potential restructuring of China's Evergrande.  A new storm may hit US oil and gas in the Gulf before recovering from the past storm and helping to underpin prices.

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