Tag Archive: Italy
The Greenback is Softer Ahead of CPI but Key Chart Points Remain Intact
Overview: The deluge of Treasury supply is nearly
over for this week. On tap today are 4- and 8-week T-bills and $23 bln 30-year
bonds to finish the quarterly refunding. The sales will come after the July CPI
print that is expected to see the first year-over-year increase since last June.
The market is going into the report with about a 15% chance of a Fed hike next
month discounted. Meanwhile, September crude oil extended its recover from $80
seen...
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Fitch Roils Markets
Overview: Late yesterday, on the eve of the
quarterly refunding announcement, Fitch cut the US rating to AA+ from AAA,
citing project fiscal deterioration over the next few years and "the
erosion of governance". S&P also has the US as an AA+ credit. Ironically,
many observers who have been critical of the US monetary and fiscal policies,
like former Treasury Secretary Summers and El-Erian, were also critical of Fitch's
decision. The...
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The Dollar Regains Composure
Overview: The dollar is better bid today. It is rising against
nearly all the G10 currencies, with the Antipodeans bearing the brunt, after a
softer than expected Australian inflation report. The yen has steadied after
extending its losses to new lows for the year. Emerging market currencies are
also mostly lower, though the Mexican peso is edging higher for the fourth
consecutive session. The large Asia
Pacific bourses rallied with the exception...
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PBOC Sends Signal in Lower Dollar Fix, while the Canadian Dollar makes a 9-Month High
Overview: Hawkish comments by ECB President Lagarde
at the central bank symposium in Sintra and the PBOC's weaker dollar fix have weighed on the greenback today. It is lower against most of the G10 currencies,
but the Japanese yen and Norwegian krone. It also slipped to a new nine-month
low against the Canadian dollar. Emerging market currencies are also mostly firmer,
with the notable exceptions of the Russian rouble and beleaguered Turkish lira....
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The Dollar Consolidates after Powell Sapped its Mojo
Overview: Federal Reserve Chair Powell's offered a
stronger case for a pause in the monetary tightening before the weekend and
this sapped the dollar's mojo. The greenback is mostly consolidating through
the European morning in quiet turnover. The JP Morgan Emerging Market Currency
Index is trying to snap a four-day decline. The South African rand is
recovering from its recent slide and is up nearly 1%. The South Korea won is
benefitting from...
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Narrow Ranges in FX: Calm before the Storm?
Overview: Equity markets are mostly weaker, and
benchmark 10-year yields are a little softer. The foreign exchange market is subdued
ahead of today’s US CPI. The large bourses in Asia Pacific region with the
exception of India worked lower and Europe’s Stoxx 600 is off for the second consecutive
session. US futures have a heavier bias. Yesterday the US bank share indices
filled the gap created at the end of last week but recovered. Today’s price...
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Dollar Comes Back Bid, as First Republic Taken Over (Mostly) by JP Morgan
Overview: Most markets are closed for the May Day
holiday. News that JP Morgan will acquire most of First Republic assets will be
a relief for the markets. US equity futures are slightly firmer, and the
10-year Treasury yield is around three basis points higher, slightly above
3.45%. Recall that before the weekend, it has fallen from almost 3.55% to 3.42%.
The market has more than a 90% chance of a quarter-point hike discounted for
Wednesday. The...
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Financial Stress Continues to Recede
Overview: Financial stress continues to recede. The
Topix bank index is up for the second consecutive session and the Stoxx 600
bank index is recovering for the third session. The AT1 ETF is trying to snap a
four-day decline. The KBW US bank index rose for the third consecutive session
yesterday. More broadly equity markets are rallying. The advance in the Asia
Pacific was led by tech companies following Alibaba's re-organization
announcement. The...
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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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Markets Catch Collective Breath
Overview: On the
heels of a dramatic jump in US job creation and firmer than expected
year-over-year CPI, the US reported a larger than expected jump in retail sales
and a strong recovery in manufacturing output. Few think that economic momentum
that the recent data implies can be repeated, the "no landing" camp
has gained adherents. We suspect that says more about psychology than the
economy. The US two-year note is threatening to snap...
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Yen Retreats Ahead of Formal BOJ Announcement Tomorrow and US CPI
Overview: A consolidative tone is mostly the theme of the day. The revisions to the US CPI announced before the weekend add to the uncertainty and focus on tomorrow's report. At the same time, investors watch ongoing air space activity that has led to a few objects being shot down over the US and Canadian airspace.
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Euro Closed above $1.09 but Follow-Through Buying Limited
Overview: After
some intraday penetration, the euro finally settled above $1.09 yesterday. However,
follow-through buying has been limited and technical and option-related
resistance is seen in the $1.0940-50 area. The dollar is more broadly mixed
today, with the dollar-bloc and Norwegian krone leading the advancers. The
euro, yen, and sterling are nursing small losses near midday in Europe. The
recovery of US equity indices yesterday after gap...
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Risk Appetites Survive China Keeping Zero Covid Policy
Overview: Chinese officials denied plans to end the zero-Covid policy
and after a brief wobble, risk assets have traded better. Asia Pacific equities
rallied, led by Hong Kong and mainland stocks that trade in Hong Kong. Europe’s
Stoxx 600 opened lower but recovered and is around 0.5% higher after the 1.8%
gain before the weekend. US futures are firm. Benchmark 10-year yields are mostly
2-4 bp softer in Europe and the US. The dollar is mixed. The...
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RBA Hikes by 25 bp, Chinese Stocks Surge, and the Greenback Trades Heavier
Overview: Risk appetites have returned today. Bonds
and stocks are advancing, while the dollar is better offered. Unsourced claims
that Beijing has formed a committee to assess how to exit the zero-Covid policy
sent Chinese shares sharply higher. An index of mainland companies list in Hong
Kong jumped nearly 7% and closed up almost 5.5%. The Hang Seng surged 5.2%,
while all the large markets in the region advanced. Europe’s Stoxx 600
recovered...
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BOJ Doesn’t Surprise, but EMU does with October CPI and Q3 Growth
Bonds and stocks are being sold ahead of the weekend. Poor corporate earnings and higher inflation in Japan and Europe are weighing on sentiment. The dollar is mostly higher. Hong Kong and mainland China led large Asia Pacific markets lower. India and Singapore were notable exceptions.
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Dollar Slumps, Yuan Rallies by Most this Year amid Intervention Talk
Overview: The US dollar is having one of toughest days of the year. It has been sold across the board and taken out key levels like parity in the euro, $1.15 in sterling, and CAD1.36. The Chinese yuan surged over 1%. Chinese officials promised healthy bond and stock markets.
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Can We Look Past US CPI ?
Overview: There seems to be a nervous calm today ahead of the US CPI. The dollar is hovering near JPY147 but the risk of BOJ intervention in the North American session seems slim. The BOE’s emergency Gilt buying operation ends tomorrow and UK bonds yields have tumbled. While equities in the Asia Pacific region lost ground, Europe’s Stoxx 600 is trying to snap a six-day decline.
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No Rest for the Weary: The Week Ahead
In Volcker's days, when he used money supply to justify tightening monetary policy despite high unemployment, the money supply was released while markets were open, and it was The report. Later, by the mid-1980s, leading up to the Plaza Agreement, the deterioration of the US monthly trade balance was critical.
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Semblance of Calm Returns
(Business travel will prevent me from updating the blog for the next couple of days. Thank you for your patience. Good luck.)Overview: After extending last week’s moves yesterday, the capital
markets are mostly calmer today. Sterling is firmer, as are UK Gilts.
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Sterling Continues to be Pounded
Overview: Sterling’s pounding continued in Asia where it was driven to $1.0350, a new record low before stabilizing. UK rates also continued to rise sharply after the new government promised more tax cuts next year. The right-wing victory in Italy was not surprising but it kept
pressure on Italian bonds.
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