Tag Archive: Japan
Can the US Employment Report be Anti-Climactic Ahead of Long North American Weekend?
Overview: Nothing is decisive, but the recent
string of data pushes the needle a little more to a soft landing for the US
economy and gave the US dollar another leg up. The risk is that some of the buying
drained some of the interest that may materialize after today's US jobs report. The
greenback is softer against the major currencies except the Japanese yen. The
dollar is extending its rally against the yen for the sixth consecutive session
and...
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New Lockdown in China and the First Drop in South Korea’s Chip Exports in 2 years Euthanizes Animal Spirits
Overview: The precipitous fall in equities continues while the dollar remains buoyant. Nvidia’s warnings about US curbs on sales to China and the first drop in South Korea’s chip exports in two years, coupled with the largest lockdown in China since Shanghai encouraged investors to move to the sidelines.
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EMU August CPI at 9.1%, while the Core Rate Jumps to 4.3%
Overview: The rise in global interest rates continues. The US 10-year yield is a few basis points near 3.15% and European benchmarks are mostly 5-6 bp higher. Of note, the sharp sell-off in UK Gilts has being extended. Yesterday’s 10 bp rise has been followed by another 14 bp surge today. Italian bonds are also getting hit. The 10-year yield is up a little more than 10 bp.
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Turn Around Tuesday Began Yesterday, Likely Ends before Wednesday
Corrective pressures were evident yesterday and they extended today in Asia and Europe but seem to be running their course now. Market participants should view these developments as countertrend and be wary of waning risk appetites in North America today.
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Jackson Hole and More
Overview: Ahead of the much-anticipated speech by
Federal Reserve Chair Powell, the Fed funds futures are pricing in about a 70%
chance of a 75 bp hike next month. The
US 10-year yield is up nearly five basis points today to 3.07% and the two-year
yield is firm at 3.38%. Asia Pacific equities
were mostly higher, with China the main exception among the large markets, after
US equities rallied yesterday. Europe’s
Stoxx 600 is off about 0.3% to...
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Dollar Longs Pared as Jackson Hole Gathering is set to Start
Overview: It seems that many market participants had
the same thing in mind, cut dollar longs before the Jackson Hole gathering. The
Antipodeans lead the majors move, encouraged perhaps by China’s new economic
measures, with around a 1% gain. The euro and sterling are up about 0.35% and
are the laggards. Emerging market currencies are higher as well, with the
notable exception of India and Turkey, which are nursing small losses. Equities
are having...
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Surging Energy Prices Pushing Europe Closer to Recession
The poor eurozone PMI underscores likely recession and weighs on the single currency, which was sold to a new 20-year low. Rather than a "Turn Around Tuesday" a broadly consolidative session is unfolding. Asian and European equities are weaker, while US futures are positive but little changed. Benchmark 10-year bond yields are mostly firmer and the premium offered by Europe's periphery is edging higher. The US 10-year is little changed near...
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No Relief for the Euro or Sterling
Overview: The euro traded below parity for the second time this year and sterling extended last week’s 2.5% slide. While the dollar is higher against nearly all the emerging market currencies, it is more mixed against the majors.
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Flash PMI, Jackson Hole, and the Price Action
For many, this will be the last week of the summer. However, in an unusual twist of the calendar, the US August employment report will be released on September 2, the end of the following week, rather than after the US Labor Day holiday (September 5).
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The Dollar is on Fire
The dollar is on fire. It is rising against all the major currencies and cutting through key technical levels like a hot knife in butter. The Canadian dollar is the strongest of the majors this week, which often outperforms on the crosses in a strong US dollar environment. It is off 1.5% this week.
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Markets Look for Direction
Overview: The biggest development today in the capital markets is the
jump in benchmark interest rates. The US
10-year yield is up five basis points to 2.86%, which is about 10 bp above
Monday’s low. European yields are up 9-10
bp. The 10-year German Bund yield was
near 0.88% on Monday and is now near 1.07%.
Italy’s premium over German is near 2.18%, the most in nearly three
weeks. Although Asia Pacific equities
rallied, led by Japan’s 1.2%...
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Greenback Remains Firm
Overview: After retreating most of last week, the US
dollar has extended yesterday’s gains today. The Canadian dollar is the most resilient,
while the New Zealand dollar is leading the decline with a nearly 0.75% drop ahead
of the central bank decision first thing tomorrow. The RBNZ is expected to
deliver its fourth consecutive 50 bp hike. Most emerging market currencies are
lower as well, led by central Europe. Equities in Asia Pacific and Europe...
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China Disappoints and Surprises with Rate Cut
Overview: Equities were mostly higher in the Asia
Pacific region, though Chinese and Hong Kong markets eased, and South Korea and
India were closed for national holidays. Despite new Chinese exercises off the
coast of Taiwan following another US congressional visit, Taiwan’s Taiex gained
almost 0.85%. Europe’s Stoxx 600 is advancing for the fourth consecutive session,
while US futures are paring the pre-weekend rally. Following disappointing data...
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Week Ahead: More Evidence US Consumption and Output are Expanding, and RBNZ and Norges Bank to Hike
After two-quarters of contraction, many still do not accept that the US economy is in a recession. Federal Reserve officials have pushed against it, as has Treasury Secretary Yellen. The nearly 530k rise in July nonfarm rolls, more than twice the median forecast in Bloomberg's survey, and a new cyclical low in unemployment (3.5%) lent credibility to their arguments. If Q3 data point to a growing economy, additional support will likely be...
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Dog Days
The dog days of August for the Northern Hemisphere are here and the capital markets are relatively subdued. Equities are firmer. The notable exceptions in Asia was China, Hong Kong, and Taiwan. The MSCI Asia Pacific Index has advanced for the last three weeks.
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Downside Risks to the US Employment Report?
Overview: The US dollar enjoys a firmer bias against
the major currencies ahead of the July employment data. Emerging market
currencies are mixed. Asian currencies are generally firm while central Europe is a bit softer. Some detect a relaxation in tensions around Taiwan, though
China’s aerial harassment continues. Taiwanese shares jumped 2.25% to lead the
region that saw China’s CSI 300 rally over 1%. Europe’s Stoxx 600 is giving
back yesterday’s...
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EMU GDP Surprises, while the Yen’s Short Squeeze Continues
Overview: The month-end and slew of data is making for a
volatile foreign exchange session, while the rash of earnings has generally
been seen as favorable though weakness was seen among the semiconductor chip
fabricators. China, Hong Kong, and Japanese equities fell but the other large
markets in the region rose.
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Greenback Jumps Back
Overview: With the exception of Japan, Taiwan, and India, the large equity
markets in the Asia Pacific region traded higher today. The Hang Seng led the
move (1.65%) amid reports that Alibaba will seek its primary listing there. Europe’s
Stoxx 600 is edging higher today. If it can hold on to the gains, it will be
the fourth consecutive rise, the longest advance since May. US futures are slightly
under water. Benchmark 10-year yields are mostly...
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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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Dismal EMU Flash PMI on Heels of First ECB Rate Hike since 2011
Overview: The euro is over a cent lower from yesterday’s peak, pressured by
the drop in the flash PMI composite below 50 for the first time since early
last year. More generally, the flash PMIs have shown the global economic
momentum is waning, and the bond markets have responded accordingly. The US
10-year yield is flirting with 2.80%, its lowest level in more than two weeks. European
yields are 15-20 bp lower and the spread between Italian and...
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