Tag Archive: ECB

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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Market Takes China’s Response in Stride, Risk Appetites Recover

2022-08-03

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2022-08-03

Overview: The market is judging China's response to Speaker Pelosi's visit in a mild way and risk appetites returned. Equity markets are higher, even though Chinese shares weakened. Europe's Stoxx 600 is edging higher after two days of small loses, and US futures enjoy a firmer bias. The surge in US rates yesterday has calmed. The US 10-year yield is firm near 2.76% and the 2-year yield is up a couple of basis points near 3.07%. European yields are...

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The Fed and GDP: Week Ahead

2022-07-23

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2022-07-23

The outcome of the Federal Reserve Open Market Committee meeting on July 27 is the most important event in the last week of July. After a brief flirtation with a 100 bp hike after the June CPI accelerated, the market has settled back to a 75 bp move. The Fed funds futures are pricing about a 10% chance of a 100 bp hike. The market anticipates that after the second 75 bp hike, the Fed will most likely return to a 50 bp hike in September.  Fed...

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Dismal EMU Flash PMI on Heels of First ECB Rate Hike since 2011

2022-07-22

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2022-07-22

Overview:  The euro is over a cent lower from yesterday’s peak, pressured by the drop in the flash PMI composite below 50 for the first time since early last year. More generally, the flash PMIs have shown the global economic momentum is waning, and the bond markets have responded accordingly. The US 10-year yield is flirting with 2.80%, its lowest level in more than two weeks. European yields are 15-20 bp lower and the spread between Italian and...

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Italian Politics Complicate the ECB’s Task

2022-07-21

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2022-07-21

The appetite for risk seen earlier this week is fading. Yesterday’s US equity gains helped lift most of the large markets in the Asia Pacific region, but China’s CSI 300 fell 1.1%, giving back most of this week’s gains as credit issues from the property sector haunt sentiment.

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The Dollar is on its Back Foot

2022-07-19

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2022-07-19

The dollar’s downside correction continues today, helped by hawkish signals from the Reserve Bank of Australia and unnamed sources who have played up the chances of a 50 bp hike by the European Central Bank on Thursday.

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Parity hysterics: What it means and what it doesn’t

2022-07-18

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2022-07-18

There’s been a flurry of articles, news stories and headlines lately over the developments in the FOREX market, specifically over the moves of the EUR/USD currency pair. As headwinds on all levels, economic, geopolitical and social, got a lot worse in recent months for the Eurozone, the news-breaking, headline-dominating “parity” event finally came about, with the euro even breaking below parity on July 13, and it seems to have captivated global...

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Monday Blues

2022-07-11

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2022-07-11

Overview:  The US dollar is bid against most currencies today, encouraged not just by good news in the US and poor news out of China, where Covid is flaring up and new social restrictions are fared, while Macau has been lockdown for a week.

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What Happened Today in a Few Bullet Points

2022-07-04

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2022-07-04

1. The most important thing to appreciate is that the market has moved to price not one but two cuts next year.  The first is priced into the September Fed funds futures and the second is in the Dec Fed funds futures. 

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No Turn Around Tuesday

2022-06-28

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2022-06-28

Overview: The global capital markets are calm today. Most of the large bourses in the Asia Pacific extended yesterday’s gain. Europe’s Stoxx 600 is advancing for the third consecutive session and is near two-and-a-half week highs.

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Consolidation in FX Featured

2022-06-27

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2022-06-27

Overview: The strong equity market rally seen at the end of last week is carrying into today’s activity. Most of the large markets in Asia Pacific rose by at least 1%.

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Nasty Number Five, Not Hawk Hiking CBs

2022-06-27

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2022-06-27

It’s not recession fears, those are in the past. For much if not most (vast majority) of mainstream pundits and newsmedia alike, unlike regular folks this is all news to them (the irony, huh?) Economists and central bankers everywhere had said last year was a boom, a true inflationary inferno raging worldwide.

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The End Game Approaches

2022-06-25

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2022-06-25

The pendulum of market sentiment swings dramatically.  It has swung from nearly everyone and their sister complaining that the Federal Reserve was lagging behind the surge in prices to fear of a recession.

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Risk Appetites are Fickle

2022-06-22

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2022-06-22

Overview: Yesterday’s strong US equity gains failed to carry over into today’s session. Japanese and Australian shares fared the best among the large Asia Pacific market, with the Nikkei off less than 0.4% and the ASX off less than 0.25%.

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Is a 0.3% Miss on Headline CPI Really Worth a 77 bp Rise in the December Fed Funds Yield?

2022-06-15

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2022-06-15

Overview: Better than expected Chinese data and an unscheduled ECB meeting are the highlights ahead of the North American session that features the May US retail sales report and other high frequency data before the outcome of the FOMC meeting.

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Over to the ECB

2022-06-09

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2022-06-09

Overview: Equity markets in Asia Pacific and Europe are weaker.  The main exception in Asia Pacific was India, where the market rose by about 0.75%. 

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The Greenback Bounces Back

2022-06-08

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2022-06-08

Overview: After modest US equity gains yesterday, the weaker yen and Beijing’s approval of 60 new video games helped lift most of the large markets in the Asia Pacific region.

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Reserve Bank of Australia Surprises, but Aussie Struggles

2022-06-07

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2022-06-07

Overview: The jump in US interest rates helped lift the greenback to new 20-year highs against the Japanese yen and pushed the euro back below $1.07. US equities saw initially strong gains pared and this set the tone for today’s activity.

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No Pandemic. Not Rate Hikes. Doesn’t Matter Interest Rates. Just Globally Synchronized.

2022-06-06

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2022-06-06

The fact that German retail sales crashed so much in April 2022 is significant for a couple reasons. First, it more than suggests something is wrong with Germany, and not just some run-of-the-mill hiccup. Second, because it was this April rather than last April or last summer, you can’t blame COVID this time.

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