Tag Archive: Japan

What Did Powell Say?

Overview:  Asia Pacific stocks rallied on the heels of the surge in US equities. China’s CSI 300 led the large bourses higher with a 1% advance. Europe’s Stoxx 600 is matching yesterday’s gain of a little more than 0.6%, while US futures are a touch softer. European yields are 9-13 bp lower, with the peripheral premiums shrinking.

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Hope Springs Eternal in China

Overview: Hope that the recent events in China are cathartic continues to lift risk appetites. Led by Hong Kong and mainland shares that trade there, the large bourses in the Asia Pacific region rallied. Japan, where macro data continues to disappoint, was the notable exception. Europe’s Stoxx 600 is snapping a three-day down draft and is up about 0.6% in late morning turnover. US futures are trading with a slightly firmer bias.

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China Steps away from the Abyss and Animal Spirits are Rekindled

Overview: Chinese officials using the carrot and the stick have succeeded in dampening the protests and easing some anxiety and rekindled the animal spirits. Hong Kong’s Hang Seng rallied 5.25% and its index of mainland shares surged 6.20%.

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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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US Jobs and Eurozone CPI Highlight the Week Ahead

Two high-frequency economic reports stand out in the week ahead:  The US November employment report and the preliminary eurozone CPI. The Federal Reserve has deftly distanced itself from any one employment report. As a result, it would take a significant miss of the median forecast (Bloomberg survey) to alter market expectations for a 50 bp hike when the FOMC meeting concludes on December 14.Economists are looking for around a 200k increase in US...

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Dollar Jumps, while Surge in Covid Cases Raise Questions about China’s Pivot

Overview: Surging Covid cases in China and Hong Kong are undermining hopes of a Covid-pivot and the US dollar is broadly higher. Equities are under pressure to start the week. Most of the large bourses in the Asia Pacific but Japan, fell earlier today. Europe’s Stoxx 600 is paring last week’s minor gain, which was the fifth consecutive weekly rise. US stock futures are lower, while the 10-year US Treasury yield is flat near 3.83%. European yields...

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Macro and Prices: Data and Psychology in the Week Ahead

The week ahead has a relatively light economic schedule, punctuated by the US Thanksgiving Day holiday on November 24. Nevertheless, the data highlights include the preliminary November PMIs, Tokyo's November CPI, and the FOMC minutes from this month's meeting.

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Higher Japanese CPI Won’t Change the BOJ’s Stance

Overview: The capital markets are heading into the weekend mostly quietly in a consolidative fashion.  Ambiguous signals from yesterday’s US equities saw a narrowly mixed performance among the large Asia Pacific bourses, but of note, Hong and China markets saw this week’s gains trimmed. Europe’s Stoxx 600 is up around 1% near midday and is slightly above last week’s close.  US equity futures are trading with a firmer bias ahead of a large...

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The Dollar Comes Back Better Bid

Animal spirits are retreating today. Asia Pacific and European equities are lower, and US futures are narrowly mixed. US 2- and 10-year yields are edging higher, while European benchmark 10-year yields are mostly softer.  Italy and the UK are notable exceptions.

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Markets are Less on Edge as the Darkest Scenarios seem Less Likely

The situation in central Europe is still intense but it appears top US, European and Polish officials are more reluctant than some market participants to attribute the darkest of intentions and paint extreme narratives.

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Poor Chinese and Japanese Data Are Not Deterring Euphoria

Overview: Recent developments have spurred a euphoria that is exciting the animal spirits. Greater confidence that US inflation has peaked, and new initiatives from China, and yesterday’s Biden-Xi meeting are all feeding this narrative. The dollar, which slumped last week, is sliding anew today. Strategically, we anticipated the turn, but tactically, we thought last week’s move had stretched the near-term technical condition.  The dollar is...

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The Dollar Posts Corrective Upticks, while the Market Digests China’s Initiatives

Overview: China’s new initiatives to support the property sector helped lift the Hang Seng. And while the China’s CSI 300 edged higher both the Shanghai and Shenzhen composites fell. Most Asia Pacific markets fell, while Europe’s Stoxx 600 is posting a small gain.

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Caution Advised in Chasing FX, but Wow!

Overview:  The softer than expected US inflation figures unleashed significant market adjustment that continue to ripple through the capital markets. The modification of some of China’s Covid stance may have also fanned some optimism, but we suggest that measures are modest tweaks, and the surge in infections will prevent the end of disruptive restrictions.

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High Anxiety: China’s Covid and US Inflation

Overview: Anxiety is running high. Rather than ease its Covid restrictions, a surge in cases is seeing more areas in China come under restrictions. The US reports CPI and of the ten reports this year, seven of them have been stronger than expected.

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Markets Consolidate After US Election

Overview: It is difficult to see the impact of the US midterm election in the immediate aftermath. The dollar is stronger against all the major currencies, but this seems to be mostly position adjusting ahead of tomorrow’s CPI report after a pullback in recent days.

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The Dollar Edges Higher

Overview: After selling off amid speculation that China’s Covid policy was going to ease, we expected the greenback to recover and consolidate ahead of Thursday’s CPI. This did not materialize yesterday, but the dollar has come back better bid today. Equity markets are mostly firmer, but nearly all the large markets, but China/Hong Kong, rising in the Asia Pacific region. Europe’s Stoxx 600 is posting small gains. It is the third session in a row...

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The Week Ahead: How Sticky is US Inflation and How Soft is China’s?

There are three potential inflection points. The first is a pause from the Fed; if nothing else, Powell signaled it was too early to think about it. The second is for the Bank of Japan to change monetary policy. Governor Kuroda has signaled that it is not time. Conventional wisdom is there will not be a change until Kuroda's term ends next April. However, we note that the surveys suggest economists and BOJ inflation forecasts for next year have...

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US Dollar Offered Ahead of the Employment Report

Overview: Risk appetites have returned but may be tested by the US jobs report. News of progress with US auditors in China helped lift Hong Kong and Chinese equities. Most of the large bourses in the region also rose. Europe’s Stoxx 600 is up a little more than 1% near midday after shedding 1.3% over the past two sessions. US futures also are trading with an upside bias. Benchmark 10-year yields are mostly a little softer today. The 10-year US...

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It is not So Much about the Fed’s hike Today but the Forward Guidance

Overview: A consolidative tone has emerged ahead of the outcome of the FOMC meeting later today. The focus is not so much on the 75 bp rate hike, but on its forward guidance. Many expect the Fed to signal it will return to a 50 bp move next month, but we are not convinced that it will go beyond indicating that 50 bp or 75 bp will be debated in December, depending on the data. The market has a 5% terminal rate discounted. The Fed does not need to...

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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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