Tag Archive: inflation

FX Daily, June 01: CNY Softens after PBOC’s Move; Equities Advance on Stronger World Outlook

2021-06-01

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2021-06-01

The US dollar fell against most major currencies following the PBOC's modest move to reduce the upward pressure on the yuan. Follow-through selling was seen earlier today, and sterling reached a new three-year high. However, the dollar found a bid in the European morning, while the Scandi currencies held on to most of their earlier gains.

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FX Daily, May 31: China Raises Reserve Requirement for FX, Stemming the Yuan’s Rise

2021-05-31

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2021-05-31

US and UK markets are closed for holidays today, contributing to the rather subdued price action today. The MSCI Asia Pacific Index rallied two percent last week, the most in three months, and most markets began off the week with modest gains. Japan, Australia, and Singapore, for notable exceptions.

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Inflation risk takes center stage – Part II of II

2021-05-31

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2021-05-31

A lot of people might be aware of historical cases of hyperinflation, like that of Hungary and the Weimar Republic, or even contemporary ones, like that of Venezuela. And yet, these are taught or reported like extreme cases, very far removed from the daily experience of most modern Western citizens.

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Inflation risk takes center stage – Part I of II

2021-05-27

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2021-05-27

Over the past couple of weeks, we’ve been seeing more and more mainstream headlines about inflation fears being on the rise, both in the US and in Europe. Central bankers on both sides of the Atlantic have been doing their best to assuage these concerns, promising that they have everything under control and that the situation will without a doubt normalize soon.

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FX Daily, May 20: Market Stabilize after Yesterday’s Tumultuous Session

2021-05-20

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2021-05-20

US equity indices finished lower, but the real story was their recovery. Asia Pacific equities were mixed, with Australia's 1.5% rally leading the recovery in some markets, including Tokyo and Singapore. Europe's Dow Jones Stoxx 600 is up a little more than 0.5% near mid-session, led by information technology and industrials, while energy and financials lagged with small gains.

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FX Daily, May 19: Now What Does Bitcoin say About the Dollar and the US?

2021-05-19

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2021-05-19

A setback in commodities and technology are roiling equity markets today. The inability of US equities to sustain yesterday's rally provided an initial headwind to trading in the Asia Pacific region today. Hong Kong and South Korea markets were closed for holidays, but most of the bourses fell, led by Australia, where the market tumbled nearly 2%, the most in almost three months as the drop in mining and energy took a toll.

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FX Daily, May 13: Long Lost Bond Vigilantes Sighted, Gives Dollar Fillip

2021-05-13

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2021-05-13

It is as if the bond vigilantes were pushed too far. US inflation is accelerating more than expected, and it cannot all be attributed to the base effect, and the Federal Reserve, to many investors, is tone-deaf. With powerful fiscal stimulus, nominal growth above 10%, and the economy re-opening, albeit unevenly, does the monetary accelerator need to be fully engaged?

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FX Daily, May 11: Stocks Slide but Little Demand for Safe Havens

2021-05-11

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2021-05-11

The sell-off in US shares yesterday has triggered sharp global losses today, and there is no flight into fixed income as benchmark yields are higher across the board. Nor is the dollar serving as much as a safe haven. It is mostly softer against the major currencies.

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The Dollar and the Fed

2021-05-08

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2021-05-08

One of the stark developments since the initial shock of the pandemic has been the aggressiveness of the US monetary and fiscal response. This was also true in dealing with the Great Financial Crisis. The divergence then and now had shaped the investment climate.

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FX Daily, April 29: US GDP: The V

2021-04-29

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2021-04-29

Overview:  The market's initial reaction to the Federal Reserve statement and the press conference was that it was dovish: the 10-year yield slipped, and the dollar was sold to new lows.  In fact, the two countries that appear to be ahead of the curve among high-income countries, Canada and Norway, saw their currencies rally to new three-year highs.

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Weekly Market Pulse: The Market Did What??!!

2021-04-19

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2021-04-19

One of the most common complaints I hear about the markets is that they are “divorced from reality”, that they aren’t acting as the current economic data would seem to dictate. I’ve been in this business for 30 years and I think I first heard that in year one. Or maybe even before I decided to lose my mind and start managing other people’s money. Because, of course, it has always been this way.

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Weekly Market Pulse: Nothing To See Here. No, Really. Nothing.

2021-04-12

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2021-04-12

The answer to the question, “What should I do to my portfolio today (this week, this month)? is almost always nothing. Humans, and especially portfolio managers, have a hard time believing that doing nothing is the right response….to anything…or nothing. We are programmed to believe that success comes from doing things, not not doing things.

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Rechecking On Bill And His Newfound Followers

2021-04-09

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2021-04-09

The benchmark 10-year US Treasury has obtained some bids. Not long ago the certain harbinger of bond rout doom, the long end maybe has joined the rest of the world in its global pause if somewhat later than it had begun elsewhere (including, importantly, its own TIPS real yield backyard).

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FX Daily, March 30: US Yields Push Higher, Lifting the Greenback Especially Against the Euro and Yen

2021-03-30

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2021-03-30

The US 10-year yield is at new highs since January 2020, pressing above 1.77% and helping pull up global yields today.   European benchmarks yields are up 4-5 bp, and the Antipodean yields jump 8-9 bp.  The impact on equities has been minor, and the talk is still about the unwinding of Archegos Capital. 

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Spending Here, Production There, and What Autos Have To Do With It

2021-03-17

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2021-03-17

US Retail Sales, 2016-2021
While the global inflation picture remains fixed at firmly normal (as in, disinflationary), US retail sales by contrast have been highly abnormal. You’d think given that, the consumer price part of the economic equation would, well, equate eventually price-wise.

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Looking Past Gigantic Base Effects To China’s (Really) Struggling Economy

2021-03-16

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2021-03-16

China Industrial Production, 1999-2021
The Chinese were first to go down because they had been first to shut down, therefore one year further on they’ll be the first to skew all their economic results when being compared to it. These obvious base effects will, without further scrutiny, make analysis slightly more difficult.

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JOLTS Revisions: Much Better Reopening, But Why Didn’t It Last?

2021-03-12

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2021-03-12

JOLTS - Job Openings, SA 2017-2021
According to newly revised BLS benchmarks, the labor market might have been a little bit worse than previously thought during the worst of last year’s contraction. Coming out of it, the initial rebound, at least, seems to have been substantially better – either due to government checks or, more likely, American businesses in the initial reopening phase eager to get back up and running on a paying basis again.

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What Gold Says About UST Auctions

2021-03-11

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2021-03-11

US Treasury & Auction Rates, 2018-2021
The “too many” Treasury argument which ignited early in 2018 never made a whole lot of sense. It first showed up, believe it or not, in 2016. The idea in both cases was fiscal debt; Uncle Sam’s deficit monster displayed a voracious appetite never in danger of slowing down even though – Economists and central bankers claimed – it would’ve been wise to heed looming inflationary pressures to cut back first.

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Central Banks Will Still Do “Whatever It Takes”!

2021-03-06

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2021-03-06

Governments are taking a page out of the play book that monetary policy began a decade ago – which will lead to even higher debt levels.

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FX Daily, March 1: Animal Spirits Roar Like a Lion to Start the New Month

2021-03-01

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2021-03-01

Overview:  Equities and bonds jump back.  Most Asia Pacific markets advanced 1.5-2.5% after the regional MSCI benchmark dropped 3.65% before the weekend and 5.3% last week.  The recovery in European stocks was even more impressive. 

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