Tag Archive: U.S. Treasuries

FX Weekly Review, June 26 – July 01: Normalization Ideas Weigh on Greenback

A virus has spread across the markets as the first half drew to a close. Many investors have become giddy. The low vol environment was punctuated by ideas that peak in monetary accommodation is past and that the gradual process of normalization is beginning.

Read More »

Fading Further and Further Back Toward 2016

Earlier this month, the BEA estimated that Disposable Personal Income in the US was $14.4 trillion (SAAR) for April 2017. If the unemployment rate were truly 4.3% as the BLS says, there is no way DPI would be anywhere near to that low level. It would instead total closer to the pre-crisis baseline which in April would have been $19.0 trillion. Even if we factor retiring Baby Boomers in a realistic manner, say $18 trillion instead, what does the...

Read More »

FX Weekly Review, June 19 – June 24: Stronger Franc with Fading Euro Enthusiam

Over the last month, the Swiss franc outpaced both EUR and USD. But the change is only little, the EUR fell by 0.60% and the dollar by 0.40%. The main reason for the stronger CHF is the fading enthusiasm after Macron's victory in the French elections and hence a weaker euro. Consequently SNB interventions are rising again.

Read More »

Bond Yields, Inflation, and More

Falling oil prices pushing down inflation expectations and lowering bond yields is the conventional narrative. It ignores that survey-based measures of inflation expectations are stable. It ignores a host of other demand factors.

Read More »

Repeat 2015; An Embarrassing Day For The Fed

Today started out very badly for the FOMC. At 8:30am the Commerce Department reported “unexpectedly” weak retail sales while at the very same time the BLS published CPI statistics that were thoroughly predictable. Markets, at least credit and money markets, have gained a clearer idea what the Fed is actually doing and why. It’s not at all what the media suggests.

Read More »

FX Weekly Review, June 12 – June 17: Greenback Still Trying To Turn

Swiss Franc vs USD and EUR Rarely in the foreign exchange market is there a V-shaped extreme. Most of the time, the high or low is a process that is carved over time. Although the explanation of the dollar’s weakness here in H1 vary, we continue to believe that the longer-term cyclical rally, the third since … Continue reading »

Read More »

Deciphering Curves

What is the yield curve supposed to look like? It’s a simple question that doesn’t actually have an answer. And because it doesn’t, there is a whole lot of confusion about bond yields.

Read More »

FX Weekly Review, June 05 – June 10: Sterling Leads Dollar Recovery

The US Dollar has lost 4% against the franc since the beginning of May, while the euro is down only 1%. Most important events in this week were the ECB meeting and the UK elections. The inability of the Tory Party to secure a parliamentary majority spurred a sharp decline in sterling.

Read More »

FX Weekly Review, May 29 – June 03: Dollar Dogged by Disappointing Data

While the Euro traded in the range between 1.08 and 1.09, the dollar declined by nearly 3%. The technical indicators warn that the US dollar is stretched, but the combination of disappointing auto sales and jobs report may deny it the interest rate support needed to facilitate a resumption of the bull market.

Read More »

FX Weekly Review, May 22 – 27: Is the Dollar Going To Turn?

The Swiss Franc recovered a lot of the losses that came with the French elections. That political event was mostly driven by speculators that will close their positions. We expected the EUR to trade around 1.07 to 1.0750 CHF in some time.

Read More »

Global Asset Allocation Update

There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are, however, changes within the asset classes. We are reducing the equity allocation and raising the allocation to REITs. 

Read More »

Less Than Nothing

As I so often write, we still talk about 2008 because we aren’t yet done with 2008. It doesn’t seem possible to be stuck in a time warp of such immense proportions, but such are the mistakes of the last decade carrying with them just these kinds of enormous costs.

Read More »

FX Weekly Review, May 15-20: Swiss Franc recovering against EUR

The Swiss Franc recovered a lot of the losses that came with the French elections. That political event was mostly driven by speculators that will close their positions. We expected the EUR to trade around 1.07 to 1.0750 CHF in some time.

Read More »

Yen is the Weakest Currency in the World over the Past Month

Yen was the strongest currency in the world from mid-March to mid-April. Yen has been the weakest currency over the past month. US rates have risen relative to Japan. Japan has shifted away from QE and toward targeting interest rate.

Read More »

FX Weekly Review, May 08-13: Euro rises far above 1.09 CHF, for how long?

The euro rose up to 1.0980. How long this momentum will last is still the question, given that it is driven by this political event and sustained by SNB interventions.

Read More »

The Wrong People Have An Innate Tendency To Stand Out

I don’t think Milton Friedman would have made much of chess player. For all I know he might have been a grand master or something close to that rank, but as much as his work is admirable it invites too the whole range of opposite emotion. He was the champion libertarian of the free market who rescued economics from the ravages of New Deal socialism, but in doing so he simply created the avenue for where Economics of that kind could be transposed...

Read More »

Noose Or Ratchet

losing the book on Q4 2016 balance sheet capacity is to review essentially forex volumes. The eurodollar system over the last ten years has turned far more in this direction in addition to it becoming more Asian/Japanese. In fact, the two really go hand in hand given the native situation of Japanese banks.

Read More »

Bi-Weekly Economic Review

The economic reports since the last economic update were generally less than expected and disappointing. The weak growth of the last few years had been supported by autos and housing while energy has been a wildcard. When oil prices fell, starting in mid-2014 and bottoming in early 2016, economic growth suffered as the shale industry retrenched.

Read More »

FX Weekly Review, May 01 – 06: Seasonal Patterns and Yen Crosses

The Swiss Franc index gained 1.5% in the last month, the biggest part of it is from the last week. The trade-weighted indices the Fed tracks are updated monthly. The Bank of England calculates the effective exchange rate on a daily basis. It has not fallen since April 24.

Read More »

Clickbait: Bernanke Terrifies Stock Investors, Again

If you are a stock investor, you should be terrified. The most disconcerting words have been uttered by the one person capable of changing the whole dynamic. After spending so many years trying to recreate the magic of the “maestro”, Ben Bernanke in retirement is still at it.

Read More »