Tag Archive: U.S. Treasuries

US Jobs: Who Carries The Burden of Proof?

The idea that interest rates have nowhere to go but up is very much like saying the bond market has it all wrong. That is one reason why the rhetoric has been ratcheted that much higher of late, particularly since the Fed “raised rates” for a third time in March. Such “hawkishness” by convention should not go so unnoticed, and yet yields and curves are once more paying little attention to Janet Yellen.

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FX Weekly Review, March 27 – 31: Euro breaks down against USD and CHF

Weak inflation figures in the euro zone let the common currency fall against both the dollar and the Swiss franc. Still last week, the Swiss Franc index had some losses against the US dollar index.

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FX Daily, March 28: Prospects for Turnaround Tuesday?

The slide in the US dollar and US interest rates faded in the North American session on Monday. US participants also had a fairly relaxed initial response to news that after years of complaining, the Republicans could not agree on an alternative to the Affordable Care Act.

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FX Weekly Review, March 20 – March 25: Dollar Bottom Near?

In the last week, the Swiss Franc index recovered and gained about 2%. The dollar index lost 1.5%. Position adjustments: The dollar tended to trade heaviest against those currencies that speculators were short, like the euro, yen, and sterling.

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All In The Curves

If the mainstream is confused about exactly what rate hikes mean, then they are not alone. We know very well what they are supposed to, but the theoretical standards and assumptions of orthodox understanding haven’t worked out too well and for a very long time now. The benchmark 10-year US Treasury is today yielding less than it did when the FOMC announced their second rate hike in December.

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FX Weekly Review, March 13 – March 18: Fed Disappoints, Dollar Losses

The failure of the Fed to signal an increased pace of normalization and the prospects of other central banks raising rates spurred dollar losses, which deteriorated its technical outlook.

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FX Weekly Review, March 06 – March 11: CHF loses against the euro

The Swiss Franc lost this week in particular against the euro, given that Mario Draghi was less dovish than expected. If the stronger euro is driven only by speculators, or also by "real money" (investments in cash, bonds, stocks) will be visible in Monday's sight deposits release.

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FX Weekly Review, February 27 – March 04: Dramatic Shift in Fed Expectations Spurs Dollar Gains, but Now What?

The pendulum of market sentiment swung hard and fast toward a Fed rate hike in the middle of March. The signals from Fed officials, including Governor Brainard and Powell, spurred the move. According to Bloomberg, the market had discounted a 90% chance of a hike before Yellen and Fischer spoke. A week ago, Bloomberg calculations showed a 40% chance of a move.

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FX Weekly Review, February 20 – 25: Ranges in FX: Respect the Price Action

It is difficult right now to talk about the foreign exchange market using the dollar as the numeraire. The dollar was stronger against most of the major currencies last week, but not the yen or sterling. The Dollar Index itself was little changed, rising less than 0.15%.

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FX Weekly Review, February 13 – 18: Why still long the dollar?

Arguments for being long the dollar: FX investors because of the difference in monetary policy (e.g. higher US rates), Bond investors long US Bonds because higher bond yields, On the other side, European and Swiss equities are not so much overvalued as U.S. stocks are.

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FX Daily, February 14: Markets Showing Little Love on Valentines

Corrective pressures are gripping the major capital markets today.The Dollar Index's nine-day advancing streak is being threatened by the position adjustment ahead of Yellen's testimony later today. Despite record high closes in the main US equity markets yesterday, Asia could not follow suit. It tried to initially, and recorded new highs since July 2015, but sellers emerged and the MSCI Asia Pacific Index closed marginally lower on the lows of the...

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FX Weekly Review, February 06 – 11: Further Dollar and CHF Strength versus Euro weakness ahead?

We are expecting a further strengthening of both dollar and Swiss Franc against the euro over the next 3 months. Reason is the rising Swiss demand the continued dovishness of the ECB, despite rising inflation.

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FX Daily, February 08: EUR/CHF down to 1.630, Swiss Boom Starting?

The reader might have seen the latest Swiss Consumer Sentiment and the UBS consumption indicator. They suggest that the Swiss boom phase should finally come. I anticipated the boom already in my slides for the CFA Society. The Swiss boom was postponed when the SNB decided to remove the euro peg in early 2015.

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Gold Prices Rising As “World Has Never Been More Uncertain”

Gold prices rising & up 6.6% YTD. Signal “impending market volatility”. World has never been more uncertain (see chart). Fear in Wall Street versus Fear in Washington. Price of ‘plunge protection’ rising even as VIX remains low. Smart money diversifying into gold. Important to watch rising gold and rising bond yields. Gold may prove the “tell”.

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FX Weekly Review, January 30 – February 04: Reversal of Trump Reflation Trade Continues

The Swiss Franc index remained around the 2% gain that for the last month, the recovery from the Trump reflation trade. In this trade, investors preferred U.S. against European stocks. This tendency, however, is reversing now - and with it the franc recovered.

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FX Weekly Review, January 23 – 28: Dollar Downwards and CHF Upwards Correction, for how long?

The US dollar spent the first month of the new year correcting lower after a strong advance in the last several months of 2016. We argue that the correction actually began in mid-December following the Federal Reserve's rate hike.

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FX Weekly Review, January 16 – 21: Dollar Still Appears to Carving out a Bottom

The US dollar turned in a mixed performance over the past week. The technical indicators continue to support our expectation that after correcting since mid-December, following the Fed's hike, the dollar is basing.

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Lagarde Urges Wealth Redistribution To Fight Populism

As we scoffed oveernight, who better than a handful of semi, and not so semi, billionaires - perplexed by the populist backlash of the past year - to sit down and discuss among each other how a "squeezed and Angry" middle-class should be fixed. And so it was this morning as IMF Managing Director Christine Lagarde, Italian Finance Minister Pier Carlo Padoan and Founder, Chairman and Co-CIO of Bridgewater Associates, Ray Dalio, espoused on what's...

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FX Weekly Review, January 09 – 14: Dollar Correction may be Over or Nearly So

For the first week since the election of Trump, the Swiss Franc index had a clearly better performance than the dollar index. It improved by 1.5% in the last ten days.

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Trump Is Set To Label China A “Currency Manipulator”: What Happens Then?

While China has been banging the nationalist drums in its government-owned tabloids, warning daily of the adverse consequences to the US from either a trade war, or from Trump's violating the "One China" policy, a more tangible concern for deteriorating relations between China and the US is that Trump could, and most likely will, brand China a currency manipulator shortly after taking over the the Oval Office.

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