Tag Archive: Fiscal
Covid Wave Knocks Euro Down and to new 6-year Lows Against the Swiss Franc
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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FX Daily, February 3: The Greenback Remains Resilient as the Bulls Drive Equities Higher
Equities have charged higher, and the greenback is mostly firmer. News that Draghi may become Italy's next Prime Minister has boosted Italian bonds. The PBOC unexpectedly drained liquidity, and this may have deterred buying of Chinese stocks, a notable exception in the regional rally.
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FX Daily, January 14: Markets are Subdued Despite Impeachment and Record Chinese Trade Surplus
Overview: The capital markets are becalmed today. There does not appear to be much reaction to the news that the House of Representatives impeached President Trump an unprecedented second time with greater bipartisan support than previously (10 GOP voted with the Democratic majority).
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FX Daily, October 22: Greenback Stabilizes
Two sets of talks have riveted attention, and both appeared to have made progress yesterday. After some words, the EC, recognizing the importance of UK sovereignty, UK Prime Minister Johnson signaled a resumption of trade talks.
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FX Daily, October 07: The Day After
President Trump's tweet announced that negotiations with the House Democrat leadership had collapsed, and there will be no further talks until after the election. Many economists had been removing it from their Q4 GDP projections, but the market was caught wrongfooted. Risk came off.
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FX Daily, May 13: Will Powell have any more Luck Pushing against Negative Rate Expectations in the US?
Overview: Another late sell-off in US shares, this one perhaps related to the sobering assessment by the leading medical adviser for the Trump Administration about the risks of opening too early, failed to deter investors in the Asia Pacific region. Although Japanese shares slipped, most other markets rose. India led the way (~2%) after a fiscal stimulus program was announced.
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FX Weekly Preview: Recovering from Too Much of a Good Thing?
Too much of a good thing is bad. That, in a nutshell, is an important insight that Hyman Minsky offered about the financial sector, but has broader application. The low volatility that has been a characteristic of the capital markets for the past few years spurred financial innovation to profit from it.
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Monetary Policy is Important, but US Fiscal Stance Moving Center Stage
Monetary policy is off the table for at least the next two months. Several fiscal issues are coming to a head. Despite the GOP majority in Congress and White House, brinkmanship cannot be ruled out.
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FX Daily, February 28: Markets Little Changed as Breakout is Awaited
The capital markets are becalmed, and the US dollar is in narrow trading ranges. Month-end considerations are at work, but the key event is much-awaited speech US President Trump to a joint session of Congress this evening (early Wednesday in Asia). The hope is that he provides the policy signals that allow the dollar to break out of its recent ranges.
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Great Graphic: Growth in Federal Spending
Federal spending growth under Obama is lower than under the previous four presidents. Subsequent to the chart, US federal spending has increased. It will likely increase more under the next President.
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FX Weekly Preview: Punctuated Equilibrium and the Forces of Movement
Shifting intermarket relationships pose challenge for investors. The market is convinced the Fed will not raise rates. Greater uncertainty surrounds the BOJ; there seems less willingness to shock and awe.
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Some Thoughts on US Fiscal Policy
The US presidential selection process is well underway, and yet there has been no coherent discussion of fiscal policy. In part, this is because it does not appear particularly urgent. The US deficit peaked in 2009 at 10.1% of GDP. Last year it stood at what for most OECD countries an enviable 2.6%. This year and next … Continue reading...
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