Tag Archive: U.K.

Risk Appetites Challenged after US Equities Tumble

Overview: The sharp sell-off of US stocks yesterday as sapped the risk appetite today. Equities are being sold. Hong Kong and the index of mainland shares that are listed there led the regional decline with 3.2%-3.3% losses. Europe’s Stoxx 600 is off about 0.65% in late morning turnover, the fourth day of losses. US futures are trading with a lower bias as well. European 10-year bonds are mostly 1-2 bp firmer. The US 10-year Treasury is practically...

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Yesterday’s Dollar Recovery Questioned Today

Overview: The 11 bp jump in the 10-year US yield yesterday after dropping nearly 26 bp in the previous three sessions, helped the greenback recover and took a toll on stocks. Still, the S&P 500 is above the low set on November 30 (~3939) before Fed Chair Powell's talk that day.

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Chinese Yuan Jumps While the Dollar recovers After Losses were Extended Against the Euro and Sterling

Overview: The markets remain hopeful about a re-opening in China and continue to pour into Chinese stocks on the mainland and in Hong Kong. The index of Chinese companies that trade in the US rose nearly 22.4% last week. Large bourses in the Asia Pacific region were mixed, but China and Hong Kong stand out. Europe’s Stoxx 600 is nursing a small loss for the second consecutive session. US equity futures have a slightly heavier bias. European 10-year...

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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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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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Calm Markets with Japan on Holiday Today and the US Tomorrow

Overview: The capital markets are quiet today with Japan on holiday and the US on holiday tomorrow. Asia Pacific equities were mostly firmer after yesterday’s rally on Wall Street. Europe’s Stoxx 600 is about 0.25% higher and at its best level in three months. US futures are steady to slightly higher. Benchmark 10-year yields are little changed. The dollar is narrowly mixed against the major currencies, with Scandis leading the way. Sweden is...

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Consolidative Session, even if Not Turn Around Tuesday

Overview: The US dollar is trading with a somewhat heavier bias after bouncing higher yesterday. All the G10 currencies are higher, led by the New Zealand dollar, where the central bank is expected to hike first thing tomorrow. Most emerging market currencies are also firmer. Those that are not, like the South Korean won and Mexican peso, are nursing minor losses. The surge in Covid cases weighed on Chinese shares that trade in Hong Kong, while the...

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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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Capital Flows Outstrip Trade Flows and that is Where to Look for Drivers of FX

Policymakers have often said that exchange rates should reflect fundamentals. What does that really mean? Can they do anything but that? It begs the question of which fundamental factors they should reflect.

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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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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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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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The Dollar Returns from the Weekend Bid

The dollar has come back from the weekend bid. After the ECB and BOJ meetings last week, the focus has shifted back to the US where the FOMC meeting concludes in the middle of the week and the October employment report is out ahead of the weekend. Sterling and the yen are the weakest performers among the G10 currencies and are off 0.45%-0.50%. The Antipodeans are performing best and are straddling little changed levels.

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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 Slump Stalls Ahead of ECB Meeting

The dollar’s recent losses have left it stretched on a near-term basis after today’s ECB meeting, the focus will shift to the Federal Reserve, next week’s meeting, and the employment report. The greenback is trading with a firmer bias against the G10 currencies, while the emerging market currencies are more mixed.

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