Tag Archive: China

Sterling Continues to be Pounded

2022-09-26

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2022-09-26

Overview: Sterling’s pounding continued in Asia where it was driven to $1.0350, a new record low before stabilizing. UK rates also continued to rise sharply after the new government promised more tax cuts next year. The right-wing victory in Italy was not surprising but it kept pressure on Italian bonds.

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Macro: Tell Us Something We Don’t Already Know

2022-09-24

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2022-09-24

As September winds down, three sets of economic reports will draw the most attention. We will review them and then offer a snapshot of the emerging market central bank meetings.

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The Greenback Firms to Start the New Week, Stocks Slide

2022-09-19

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2022-09-19

Overview:  The busy week is off to a slow start as Japan is on holiday and the UK and Canadian markets are closed to honor Queen (Australia will commemorate with a holiday on Thursday). Nevertheless, the sell-off in equities continues and the US dollar is firm. Most of the large markets in Asia fell. India is a notable exception. Its benchmark rose for the first time in four sessions, helped by bank shares and Infosys. Europe’s Stoxx 600 is off for...

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The Dollar Heads into the Weekend Well Bid

2022-09-16

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2022-09-16

Overview:  The dollar is well bid. It has risen to new two-year highs against the dollar bloc and Chinese yuan. Aided by worse than expected retail sales, sterling, on its anniversary of leaving the European Exchange Rate Mechanism fell to its lowest level since 1985. This fits into the broader risk-off move. The S&P 500 fell to new two-month lows yesterday, and FedEx warnings after the bell yesterday add to the string of worrisome comments...

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The Russians (Propaganda) Are Coming!

2022-09-15

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2022-09-15

The headline reads “Moscow World Standard to Destroy LBMA’s Monopoly in Precious Metals Pricing”. Wow! Could it be? Is this it?! The gold revaluation we’ve all been waiting for! Someone, who has the power, will give us a venue in which we can sell our gold at its true price… how does $50,000 sound, eh?

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Careful about Chasing the Dollar Lower in North America Today

2022-09-12

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2022-09-12

The bout of profit-taking on long dollar positions begun last week has carried into the start of this week. Despite the escalating rhetoric, the yen is not participating today and is trading within the pre-weekend ranges. The greenback’s lows have been set in the European morning and have stretched the intraday momentum indicators, suggesting that North American dealers may not follow suit.

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Sharp Dollar Setback may offer Bulls a Bargain

2022-09-09

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2022-09-09

The dollar is having one of the largest setbacks in recent weeks. We expected the dollar to soften ahead of next week’s CPI, which may fan ideas/hopes of a peak in US price pressures, but the magnitude and speed of the move is surprising, and likely speaks to the extreme positioning.

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What Happened Monday

2022-09-05

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2022-09-05

The US and Canada may have been on holiday on September 5, but the world waits for no one and there were several significant developments. First, Gazprom's decision to indefinitely suspend gas shipments through the Nord Stream 1 pipeline announced before the weekend saw the European natgas benchmark soar 23.7.

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RBA, BOC, and ECB Meetings and more in the Week Ahead

2022-09-03

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2022-09-03

All three major central banks that meet in the coming days will hike rates. The question is by how much. The Reserve Bank of Australia makes its announcement early Tuesday, September 6. One of the challenges for policymakers and investors is that Australia reports inflation quarterly. The Q2 estimate was released on July 27. It showed prices accelerating to 6.1% year-over-year from 5.1% in Q1. The trimmed mean rose to 4.9% from 3.7%, and the...

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Can the US Employment Report be Anti-Climactic Ahead of Long North American Weekend?

2022-09-02

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2022-09-02

Overview:  Nothing is decisive, but the recent string of data pushes the needle a little more to a soft landing for the US economy and gave the US dollar another leg up. The risk is that some of the buying drained some of the interest that may materialize after today's US jobs report. The greenback is softer against the major currencies except the Japanese yen. The dollar is extending its rally against the yen for the sixth consecutive session and...

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New Lockdown in China and the First Drop in South Korea’s Chip Exports in 2 years Euthanizes Animal Spirits

2022-09-01

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2022-09-01

Overview: The precipitous fall in equities continues while the dollar remains buoyant. Nvidia’s warnings about US curbs on sales to China and the first drop in South Korea’s chip exports in two years, coupled with the largest lockdown in China since Shanghai encouraged investors to move to the sidelines.

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EMU August CPI at 9.1%, while the Core Rate Jumps to 4.3%

2022-08-31

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2022-08-31

Overview: The rise in global interest rates continues. The US 10-year yield is a few basis points near 3.15% and European benchmarks are mostly 5-6 bp higher. Of note, the sharp sell-off in UK Gilts has being extended. Yesterday’s 10 bp rise has been followed by another 14 bp surge today. Italian bonds are also getting hit. The 10-year yield is up a little more than 10 bp.

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Turn Around Tuesday Began Yesterday, Likely Ends before Wednesday

2022-08-30

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2022-08-30

Corrective pressures were evident yesterday and they extended today in Asia and Europe but seem to be running their course now. Market participants should view these developments as countertrend and be wary of waning risk appetites in North America today.

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Weekly Market Pulse: The Dog That Didn’t Bark

2022-08-29

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2022-08-29

Gregory (Scotland Yard detective): “Is there any other point to which you would wish to draw my attention?” Sherlock Holmes: “To the curious incident of the dog in the night-time.” Gregory: “The dog did nothing in the night-time.” Sherlock Holmes: “That was the curious incident.” From Silver Blaze by Arthur Conan Doyle, 1892

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The Week Ahead: Dollar Bulls Still in Charge

2022-08-27

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2022-08-27

The poor preliminary PMI readings, the ongoing European energy crisis, and the recognized commitment of most major central banks to rein in prices through tighter financial conditions are risking a broad recession. These considerations are weighing on sentiment and shaping the investment climate. Most high-frequency data due in the days ahead will not change this, even if they pose some headline risk.  

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Jackson Hole and More

2022-08-26

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2022-08-26

Overview: Ahead of the much-anticipated speech by Federal Reserve Chair Powell, the Fed funds futures are pricing in about a 70% chance of a 75 bp hike next month.  The US 10-year yield is up nearly five basis points today to 3.07% and the two-year yield is firm at 3.38%.  Asia Pacific equities were mostly higher, with China the main exception among the large markets, after US equities rallied yesterday.  Europe’s Stoxx 600 is off about 0.3% to...

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Dollar Longs Pared as Jackson Hole Gathering is set to Start

2022-08-25

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2022-08-25

Overview: It seems that many market participants had the same thing in mind, cut dollar longs before the Jackson Hole gathering. The Antipodeans lead the majors move, encouraged perhaps by China’s new economic measures, with around a 1% gain. The euro and sterling are up about 0.35% and are the laggards. Emerging market currencies are higher as well, with the notable exception of India and Turkey, which are nursing small losses. Equities are having...

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No Relief for the Euro or Sterling

2022-08-22

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2022-08-22

Overview: The euro traded below parity for the second time this year and sterling extended last week’s 2.5% slide. While the dollar is higher against nearly all the emerging market currencies, it is more mixed against the majors.

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Flash PMI, Jackson Hole, and the Price Action

2022-08-20

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2022-08-20

For many, this will be the last week of the summer. However, in an unusual twist of the calendar, the US August employment report will be released on September 2, the end of the following week, rather than after the US Labor Day holiday (September 5). 

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