Tag Archive: Japan

Markets Calmer, Awaiting Fresh Incentives

2021-12-08

by

2021-12-08

Overview:  The capital markets are calmer today, and the fear that was evident at the end of last week remains mostly scar tissue. Led by gains in Japan, China, Australia, New Zealand, and India, the MSCI Asia Pacific Index extended yesterday's gains.  Europe's Stoxx and US futures are firm.  The US 10-year yield is softer, around 1.43%, while European yields are mostly 1-2 bp lower.  The Norwegian krone and euro lead major currencies higher...

Read More »

Animal Spirits Roar Back

2021-12-07

by

2021-12-07

Overview:  A return of risk appetites can be seen through the capital markets today, arguably encouraged by ideas that Omicron is manageable and China's stimulus.  Led by Hong Kong and Japan, the MSCI Asia Pacific rose by the most in three months, while Europe's Stoxx 600 gapped higher, leaving a potentially bullish island bottom in its wake.  US futures point to a gap higher opening when the local session begins.  The bond market is taking it in...

Read More »

The Greenback Finds Traction ahead of the Jobs Report

2021-12-03

by

2021-12-03

Overview:  The Omicron variant has been detected in more countries, but the capital markets are taking it in stride.  Risk appetites appear to be stabilizing.  The MSCI Asia Pacific Index rose for the third consecutive session, though Hong Kong and Taiwan markets did not participate in the advance today.  Europe's Stoxx 600 is struggling to hold on to early gains, while US futures are narrowly mixed.  The US 10-year yield is a little near 1.43%,...

Read More »

Fragile Calm Returns and Powell’s Anti-Inflation Rhetoric Ratchets Up

2021-12-01

by

2021-12-01

Overview:  Into the uncertainty over the implications of Omicron, the Federal Reserve Chairman injected a particularly hawkish signal into the mix in his testimony before the Senate.  These are the two forces that are shaping market developments.  Travel restrictions are being tightened, though the new variant is being found in more countries, and it appears to be like closing the proverbial barn door after the horses have bolted. Equities are...

Read More »

Sentiment Remains Fragile

2021-11-29

by

2021-11-29

Overview: The fire that burnt through the capital markets before the weekend, triggered by the new Covid mutation, burned itself out in the Asian Pacific equity trading earlier today. A semblance of stability, albeit fragile and tentative, has emerged. Europe's Stoxx 600 is up about 1%, led by real estate, information technology, and energy.  US index futures are trading higher, with the NASDAQ leading.  Benchmark 10-year yields are firmer.  The US...

Read More »

The ‘Growth Scare’ Keeps Growing Out Of The Macro (Money) Illusion

2021-11-26

by

2021-11-26

When Japan’s Ministry of Trade, Economy, and Industry (METI) reported earlier in November that Japanese Industrial Production (IP) had plunged again during the month of September 2021, it was so easy to just dismiss the decline as a product of delta COVID.

Read More »

Turkey gets a Reprieve before US Thanksgiving, but Capital Strike may not be Over

2021-11-24

by

2021-11-24

Overview:  The dramatic collapse of the Turkish lira was like an accident one could not help look at, but it was not an accident, but the result of a disregard for the exchange rate and compromised institutions.  The lira was off around 15% at its worst yesterday, before settling 11.2% lower.  After falling for 11 sessions, it has steadied today (~2.7%)  but the capital strike may not be over.  On the other hand, the Reserve Bank of New Zealand...

Read More »

Market Shrugs Off Chinese Signals and Keeps the Yuan Bid

2021-11-22

by

2021-11-22

Overview:  The US dollar has come back bid from the weekend against most currencies following the talk by a couple of Fed governors about the possibility of accelerating the tapering at next month's FOMC meeting.  The weekend also saw protests against the social restrictions being imposed by several European countries in the face of a surge in Covid cases.  The Swedish krona, yen, and sterling are the weakest, while the dollar-bloc currencies are...

Read More »

Covid Wave Knocks Euro Down and to new 6-year Lows Against the Swiss Franc

2021-11-19

by

2021-11-19

Overview:  Concerns about the virus surge in Europe cut short the euro's bounce and sent it back below $1.1300 and are also weighing on central European currencies, including the Hungarian forint, despite yesterday's aggressive hike of the one-week deposit rate.  Austria has reintroduced a hard 20-day lockdown.  Germany's health minister warned that the situation deteriorated and vaccines were not enough to break the wave.  He was explicit that a...

Read More »

Euro Bounces Back, but the Turkish Lira Remains Unloved

2021-11-18

by

2021-11-18

Overview:  The US dollar's sharp upside momentum stalled yesterday near JPY115 and after the euro met (and surpassed) a key retracement level slightly below $1.1300.  Led by the Antipodean currencies today, the greenback is mostly trading with a heavier bias.  Among the majors, helped by a steadying of US yields, the yen is soft.  In the emerging market space, the Turkish lira continues its headlong plunge while the yuan softened and the Mexican...

Read More »

European Gas Jumps, while the Euro and Yen Slump

2021-11-17

by

2021-11-17

Overview: The prospects that the 6.2% CPI will prompt the Fed to move quicker continue to underpin the dollar.  The euro fell to about $1.1265, its lowest level since last September, and the Japanese yen slumped to a fresh four-year low.  The JP Morgan Emerging Market Currency Index tumbled 1% yesterday, the largest decline since February.  A more stable tone is evident in Europe, as the euro has recovered above $1.13, and the JP Morgan Index is...

Read More »

The Greenback Slips to Start the New Week

2021-11-15

by

2021-11-15

Overview:  While the Belarus-Poland border remains an intense standoff, there have been a couple other diplomatic developments that may be exciting risk appetites today.  First, Biden and Xi will talk by phone later today.  Second, reports suggest the UK has toned down its rhetoric making progress on talks on the implementation of the Northern Ireland Protocol.

Read More »

US Retail Sales and Industrial Output to Accelerate; China not so Much

2021-11-13

by

2021-11-13

At the halfway point of Q4, the markets' focus is on three things:  inflation, growth, and central banks' response. With US and Chinese October inflation readings behind us, the focus shifts to the real economy's performance, the world's two largest economies reporting retail sales and industrial production figures.   Helped by stronger auto sales, the first increase in six months, US retail sales likely turned in another solid showing of around...

Read More »

Euro and Sterling Record New Lows for the Year

2021-11-12

by

2021-11-12

Overview: The capital markets remain unsettled.  The US CPI with a 6%-handle has lifted bond market volatility, disrupted rallies in stocks, and extended the dollar's rally.   Small gains in the US S&P 500 and NASDAQ yesterday and a better news stream from China helped lift Asia Pacific equities today.  Benchmarks in Japan, South Korea, and India rose more than 1%.  Europe's Stoxx 600 is struggling as energy, health care, and utilities are...

Read More »

Half a Dozen Things You Should Know about FX

2021-11-11

by

2021-11-11

1.  The market is still digesting the implications of Wednesday's CPI shock.  The dollar has strengthened, yields have risen, the stock market wobbled after a long advancing streak, and in any event, stabilized in light trading during the US and Canadian holidays. However, given the low year-ago reading, there is a significant risk that inflation (including the core rate) will accelerate over the next few months. As a result, the Federal Reserve...

Read More »

FX Daily, November 9: Falling Yields Give the Yen a Boost

2021-11-09

by

2021-11-09

Overview: Reports that the Fed's Brainard was interviewed for the Chair helped soften yields a bit, not that they needed extra pressure, on ideas she is more dovish than Powell.  In turn, the lower yields saw the yen rise to its best level in nearly a month and led the major currencies higher against the dollar. 

Read More »

Markets Await Fresh Developments

2021-11-08

by

2021-11-08

Overview: Last week's bond market rally has stalled.  Benchmark 10-year yields are up 1-3 bp in Europe, and the three bp increase in the US puts the yield slightly below 1.50%.  Equities were mixed in the Asia Pacific region. 

Read More »

Isn’t the Labor Shortage Transitory?

2021-11-05

by

2021-11-05

Overview:  The major central banks have successfully pushed back against the aggressive tightening the market had discounted.  The Bank of England's decision not to raise rates after key officials seemed to suggest one was imminent. On the heels of what we argued was a dovish tapering announcement by the Fed, it spurred a dramatic decline in short and long-term interest rates. The drop in UK rates--21 bp in the 2-year and nearly 14 bp in the...

Read More »

And the Dollar Bounces Back, While BOE is in Focus

2021-11-04

by

2021-11-04

Overview:  The Federal Reserve announced tapering and, like the Reserve Bank of Australia earlier in the week, did not validate expectations for an aggressive rate hike.  Now the focus is on the Bank of England, where several officials seemed to goad the market into lifting short-term rates. The S&P 500 and NASDAQ rallied to new record highs yesterday and helped raise global shares today.  Among the large markets in the Asia Pacific region,...

Read More »

US-EU Rapprochement, Can France and UK Do the Same?

2021-11-01

by

2021-11-01

Overview:  It is mostly a quiet start to the new month.  Most of Europe is closed for the All -Saints holiday and the week's key events start tomorrow with the Reserve Bank of Australia meeting.  News that the Liberal Democrats retained a majority in the lower chamber of the Diet helped lift Japanese indices by 2%.  Most of the large regional markets gained, though China and Hong Kong markets fell. US index futures are trading with a higher bias...

Read More »