Tag Archive: FOMC
Strong US Retail Sales may Help Extend the Dollar’s Recovery
Overview: We have put emphasis on today's US retail sales report. A recovery from the weather-induced weakness in January should underscore the resilience of US demand after another 200k jobs were created and personal income jumped 1%.
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China’s CSI 300 Rises for Seventh Consecutive Session and Offshore Yuan Strengthens for the Sixth Session
Overview: The dollar is trading quietly
after being sold yesterday. It is still soft against the dollar bloc and the
Swiss franc but is firmer against the other G10 currencies. Narrow ranges have
dominated. Emerging market currencies are mixed, with central European
currencies and the Taiwan dollar trading softer. The offshore Chinese yuan is
firmer for the sixth consecutive session. The highlights of today's North
American session features minutes...
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US Tech Sell-Off Challenges Risk Appetites Ahead of the FOMC
Overview: Ahead of the US Treasury's quarterly
refunding announcement and the outcome of the FOMC meeting, the dollar is
trading higher against all the G10 currencies. With US high-flying tech stocks
posting steep losses after disappointing earnings reports, the currencies most
sensitive to risk-appetites, the dollar bloc and the Norwegian krone are the
weakest. Emerging market currencies are mixed. The South African rand,
Philippine peso, and...
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Fed to Express More Confidence that Policy is Sufficiently Restrictive Despite the Easing of Financial Conditions
Commentary will resume with a 2024 outlook on December 29. Overview: The dollar is trading with a firmer bias today ahead of the outcome of the FOMC meeting. Standing pat for two
meetings was framed as a pause, but given the decline in price pressures, being
unchanged for a third meeting is understood as the end of the historically
aggressive tightening cycle. Fed Chair Powell is expected to express greater confidence
that policy is sufficiently...
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BOJ Speculation Unwound, Taking the Yen Lower
Overview: The busy week of central bank meetings is
off to a mostly slow start. The dollar is narrowly mixed in quiet turnover,
except against the Japanese yen. Many participants seemed to exaggerate the
risks of a BOJ move next week and dollar continued its recovery that began
ahead of the weekend. Among emerging market currencies, central European
currencies appear to be aided by the firmer euro. They are resisting the
dollar's advance seen...
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Hawkish ECB Comments Boost Risk of a 50 bp Hike Next Month
Overview: The 0.5% decline in US March producer
prices pushed on the door opened by the softer-than-expected CPI on Wednesday.
The Fed funds futures market sees the year end rate to a 4.33%, while still
pricing in a nearly 70% chance of a hike on May 3 to 5.25%. The dollar tumbled
to new lows for the year against the euro, sterling, and Swiss franc. The
Dollar Index made a new low for the year today, a few hundredths of an index
point below the low...
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Terms of UBS Acquisition Wipes out Additional Tier 1 Capital and Spurs Fresh Concerns
Overview: UBS takeover of Credit Suisse, the sale of
Signature bank assets, and the daily dollar swaps could have helped stabilize
the budding banking crisis. However, the wipeout of the additional tier 1
capital cushion (16 bln Swiss francs) at Credit Suisse has raised concern about
the vulnerability of other such assets, which post-GFC is a $275 bln market in
Europe. Asia Pacific equities was a sea of red, led by a 2.65% drop in the Hang
Seng...
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Investors Shaken by Rising Rates
Overview: The surge in US interest rates and sharp
losses in US stocks sent the dollar broadly higher in North America yesterday. The
$42 bln of two-year notes auctioned by the US Treasury saw the highest yield in
more than a quarter-of-a-century (4.67%) and it still produced a small tail.
Sterling, helped by its own surprisingly strong data, was the only G10 currency
to have gained against the surging dollar. Still, no important technical levels...
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The Market Appears to Shrug Off the Fed’s Warning
Overview: The US dollar is consolidating in a mixed
fashion today. The FOMC minutes drew much attention but failed, at least
initially, to spur a significant shift in expectations. The pricing in the Fed
funds futures strip is still consistent with a cut later this year, which the
minutes were clear, no officials anticipate. Today's US ADP jobs estimate, and
November trade balance are being overshadowed by tomorrow's nonfarm payroll
figures. The...
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Five G10 Central Banks Meet and US CPI on Tap
Half of the G10 central banks meet in the week ahead. The Fed is first on December 14, and the ECB, BOE, Swiss National Bank, and Norway's Norges Bank meet the following day. Before turning a thumbnail sketch of the central banks, let us look at the November US CPI, which will be reported as the Fed's two-day meeting gets underway on December 13.
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China Shakes Markets, Euro Shakes it Off
Overview: The surging Covid cases in China and the protests in
several cities seemed to set the tone for today’s session. Equities are lower. China,
Hong Kong, Taiwan, and South Korea were marked down the most. Of the large
bourses, only India escaped unscathed. Europe’s Stoxx 600 is off more than 0.8%
and US futures are poised to gap lower. Bond markets are quieter. The 10-year
US Treasury yield is off a little more than one basis point to around...
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RBA, FOMC, BOE Meetings Featured while the Greenback’s Recovery can be Extended
The week ahead is important from a macro perspective. The data highlights include China's PMI, eurozone preliminary October CPI and Q3 GDP, and the US (and Canadian) employment reports. In
addition, the Federal Reserve meeting on November 2 is sandwiched between the Reserve Bank of Australia meeting and the Bank of England meeting.
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Weekly Market Pulse: Just A Little Volatility
Markets were rather volatile last week. That’s a wild understatement and what passes for sarcasm in the investment business. Stocks started the week waiting with bated (baited?) breath for the inflation reports of the week. It isn’t surprising that the market is focused firmly on the rear view mirror for clues about the future since Jerome Powell has made it plain that is his plan, goofy as it is.
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No One Wants a Recession, but Central Banks are willing to Take the Risk to Demonstrate Anti-Inflation Resolve
The
week ahead is busy. Three G7 central banks meet, the Federal
Reserve, the Bank of Japan, and the Bank of England. In addition, Japan and Canada
report their latest CPI readings, and the flash September PMI are
released. There
are three elements of the Fed's meeting that are worth previewing. First is the
interest rate decision itself and the accompanying statement. Ironically, this
seems to be the most straightforward. Even before the August...
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Yen Squeeze Continues
The US dollar begins the new month better offered. It is softer against all the major currencies. Short yen positions continue to get unwound, which is leading the move, followed by the Antipodeans, where the Reserve Bank of Australia is expected to hike rates tomorrow.
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Greenback Softens, but Think Twice about Chasing It
Overview: Aside from political economic risks, three
other challenges are emerging. First, the new sub-variant of Covid is spreading
rapidly. BA5 reportedly is accounting for around 80% of the new cases. It is
better able to evade antibodies from vaccines and earlier infections. Hospitalization
rates are also climbing. Dining, retail, and travel may be impacted. Second,
the World Health Organization declared monkeypox a global emergency. The US...
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Market Pulse: Mid-Year Update
Note: This update is longer than usual but I felt a comprehensive review was necessary. The Federal Reserve panicked last week and spooked investors into the worst week for stocks since the onset of COVID in March 2020. The S&P 500 is now firmly in bear market territory but that is a fraction of the pain in stocks and other risky assets.
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Sorry Chairman Powell, Even FRBNY Now Has To Forecast Serious and Seriously Rising Recession Risk
At his last press conference, Federal Reserve Chairman Jay Powell made a bunch of unsubstantiated claims, none of which were called out or even questioned by the assembled reporters. These rituals are designed to project authority not conduct inquiry, and this one was perhaps the best representation of that intent. Powell’s job is to put the current predicament in the best possible light, starting by downplaying the current predicament.
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US Federal Reserve Sticks To The Script But For How Long?
2023-02-04
by Stephen Flood
2023-02-04
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