Tag Archive: ECB

Capital and Commodity Markets Strain

2022-03-04

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2022-03-04

Overview:  The capital and commodity markets are becoming less orderly.  The scramble for dollars is pressuring the cross-currency basis swaps.  Volatility is racing higher in bond and stock markets.  The industrial metals and other supplies, and foodstuffs that Russia and Ukraine are important providers have skyrocketed.  Large Asia Pacific equity markets, including Japan, Hong Kong, China, and Taiwan fell by 1%-2%, while South Korea, Australia,...

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The Week Winds Down with Equities under Pressure and the Dollar Mostly Firmer

2021-12-17

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2021-12-17

Overview: The combination of the volatility and a large number of central bank meetings have exhausted market participants, and the holiday phase appears to have begun. Equities are under pressure following the sell-off yesterday in the US. Japan, China, and Hong Kong suffered more than 1.2% losses, while Australia, South Korea, and Taiwan posted minor gains. It was the fifth loss in the past six sessions for the MSCI Asia Pacific Index. Europe's...

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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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Has the Market Carried the Fed’s Water? Is the Dollar Vulnerable to Buy the Rumor and Sell the Fact?

2021-12-15

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2021-12-15

Overview: The US dollar is trading with a bit of heavier bias against most of the major currencies as the focus turns to today's FOMC meeting, where a clear consensus has emerged in favor of faster tapering and a dot plot pointing to a steeper pace rate hikes.  Emerging market currencies led by Turkey and South Africa are mostly lower. The JP Morgan Emerging Market Currency Index is lower for the third straight session.  The US 10-year Treasury...

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Central Bank Fest

2021-12-11

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2021-12-11

Next week is the last big week of the year, and what a week it will be:  Five major central banks meet and at least nine from emerging market countries.  Norway's Norges Bank is the most likely major central bank to hike its key (deposit) rate (December 16).  It would be the second hike of the year.  The economy is enjoying a solid recovery, and headline inflation rose to 4.6% in November, its fastest pace since 2008.  The underlying rate, which...

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Jobs (US) and Inflation (EMU) Highlight the Week Ahead

2021-11-27

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2021-11-27

The new covid variant and quick imposition of travel restrictions on several countries in southern Africa have injected a new dynamic into the mix.

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Covid Wave Knocks Euro Down and to new 6-year Lows Against the Swiss Franc

2021-11-19

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2021-11-19

Overview:  Concerns about the virus surge in Europe cut short the euro's bounce and sent it back below $1.1300 and are also weighing on central European currencies, including the Hungarian forint, despite yesterday's aggressive hike of the one-week deposit rate.  Austria has reintroduced a hard 20-day lockdown.  Germany's health minister warned that the situation deteriorated and vaccines were not enough to break the wave.  He was explicit that a...

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China’s CPI Accelerated to 1.5%, US CPI to Approach 6%

2021-11-10

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2021-11-10

Overview: As bond yields slumped yesterday, stocks snapped their advancing streak.  The Stoxx 600 fell for the first time in nine sessions yesterday and is lower today.  The S&P 500 ended a nine-session advance, and the NASDAQ snapped a 12-session rally.  Futures on the indices point to a lower open.  Bonds are paring yesterday's gain, which saw the US 10-year yield fall below its 200-day moving average (~1.45%) and may explain the soft auction...

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The Real Tantrum Should Be Over The Disturbing Lack of Celebration (higher yields)

2021-11-03

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2021-11-03

Bring on the tantrum. Forget this prevaricating, we should want and expect interest rates to get on with normalizing. It’s been a long time, verging to the insanity of a decade and a half already that keeps trending more downward through time. What’s the holdup?

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Rate Adjustment Continues and the Greenback Pares the Week’s Losses

2021-10-29

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2021-10-29

Overview:  Disappointing Apple and Amazon earnings news after the NASDAQ set a record high set the stage of a weaker bias in the Asia Pacific region today.  China and Japan still posted gains, while local developments, like an unexpected drop in South Korea's industrial output, and Australia struggling to exit its yield-curve control, saw equities lose more than 1%.  Europe's Stoxx 600 is paring this week's gains but is holding on to some for 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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Week Ahead: The First Look at US and EMU Q3 GDP and more Tapering by the Bank of Canada

2021-10-23

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2021-10-23

The macro highlights for the week ahead fall into three categories.  First are the preliminary estimates for Q3 GDP by the US and the EMU.  Second, are the inflation reports by the same two.  The US sees the September PCE deflator, which the Fed targets, while the eurozone releases the first estimate for October CPI.  Third are the meetings of three G7 central banks, the BOJ, the ECB, and the Bank of Canada. The broad backdrop includes softening...

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Markets Turn Cautious

2021-10-21

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2021-10-21

Overview: After a couple of sessions of taking on more risk, investors are taking a break today.  Equities are mostly lower today after the S&P 500's six-day advance took it almost to its record high, while the NASDAQ's streak was halted at five sessions.

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Hope Springs Eternal, or at least enough to Lift Risk Taking Today

2021-10-07

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2021-10-07

Overview:  The animal spirits have been reanimated today.  Encouraged by the dramatic reversal in oil and gas prices, a deal in the US that pushes off the debt ceiling for a few weeks and talk of a new bond-buying facility in the euro area spurred further risk-taking today, ahead of tomorrow's US employment report. 

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Tapering Or Calibrating, The Lady’s Not Inflating

2021-10-07

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2021-10-07

We’ve got one central bank over here in America which appears as if its members can’t wait to “taper”, bringing up both the topic and using that particular word as much as possible. Jay Powell’s Federal Reserve obviously intends to buoy confidence by projecting as much when it does cut back on the pace of its (irrelevant) QE6.

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Don’t Make a Fetish Out of What may be a Minor Change in the Pace of ECB Bond Buying

2021-09-09

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2021-09-09

Overview: Yesterday's retreat in US indices was part of and helped further this bout of profit-taking. The MSCI Asia Pacific Index ended an eight-day advance yesterday and fell further today. Japanese indices, which had set multiyear highs, fell for the first time in nine sessions. Hong Kong led the regional slide with a 2.3% decline as China's crackdown on the gaming industry continued. 

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The Greenback Continues to Claw Back Recent Losses

2021-09-08

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2021-09-08

Overview:  The US dollar continues to pare its recent losses and is firm against most major currencies in what has the feel of a risk-off day.  The other funding currencies, yen and Swiss franc, are steady, while the euro is heavy but holding up better than the Scandis and dollar-bloc currencies.  Emerging market currencies are also lower, and the JP Morgan EM FX index is off for the third consecutive session. 

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FX Daily, July 22: Enguard Lagarde

2021-07-22

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2021-07-22

Overview: The rally in US shares yesterday, ostensibly fueled by strong earnings reports, is helping to encourage risk appetites today.  The MSCI Asia Pacific Index is posting its biggest gain in around two weeks, though Japan's markets are closed today and tomorrow.  The Dow Jones Stoxx 600 is building on yesterday's rally, and with today's ~0.8% gain, it is up on the week.

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Inching Closer To Another Warning, This One From Japan

2021-07-20

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2021-07-20

UST Yield Curve, 2017-2019
Central bankers nearly everywhere have succumbed to recovery fever. This has been a common occurrence among their cohort ever since the earliest days of the crisis; the first one. Many of them, or their predecessors, since this standard of fantasyland has gone on for so long, had caught the malady as early as 2007 and 2008 when the world was only falling apart.

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FX Daily, July 16: BOJ Tweaks Forecasts

2021-07-16

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2021-07-16

The markets head into the weekend with little fanfare. Most large equity markets in the Asia Pacific region slipped earlier today. Hong Kong, which will be exempt from the need to secure mainland's cybersecurity approval for foreign IPOs, and Australia were notable exceptions. European bourses are edging higher, while US futures are oscillating around unchanged levels.

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