Overview: The capital markets are consolidating the recent moves ahead of the weekend. Equities are paring this week’s gains, though the Nikkei, which was closed on Monday, extended its advance for the fourth consecutive session. Despite the profit-taking today, the MSCI Asia Pacific Index rose for the fifth week. Europe’s Dow Jones Stoxx 600 is snapping …
The most striking thing about last week’s price action was the surge in US yields. The 10-year yield jumped about 34 basis points, the most in three years and returned to levels not seen since August 2 (1.90%). A deluge of investment-grade corporate bonds and US Treasuries ($78 bln auctioned to lukewarm reception), coupled with …
It has been discussed for several weeks, and today the European Commission unveiled a proposal for a new asset-backed security. The backing would be sovereign bonds weighted by the size of the economy. This may sound like mutualization of risk, but it is no such thing. These new securities are not Eurobonds. The EC is calling …
Japan reported a larger than expected March current account surplus. It typically rises in March even though the seasonal pattern is not quite as strong as it is in February. For the last 20 years, Japan’s current account surplus in February is always larger than the January surplus, which has, without fail, been smaller than …
While the pundits are talking trade wars, Chinese officials are taking the latest US provocations in stride. Pressure on China’s trade practices are not new. The US has been complaining about intellectual property violations since Bill Clinton was President. China’s trade practices have also raised the ire or US and Europe, which has resulted in …
The strength of the Japanese yen puzzles many observers. North Korea’s missile test flew over Japan for the first time in a year. Why would investors buy the yen on such news? There are two types of buying that may be confused. There is the normal buying, which is to increase the exposure to a …
The market’s immediate focus is on today’s FOMC meeting and Dutch elections. However, China’s annual legislative session (National People’s Congress) ended earlier today, and Premier Li unveiled a new initiative. Late this year, China will allow overseas funds to buy onshore bonds in Hong Kong. Details on the mechanics, including implementation timeframe, were not immediately …
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. A seemingly necessary precondition is higher US rates. The US 10-year yield bottomed near 2.30% early last week and finished near 2.45%, …
After an initial wobble, the markets have stabilized as two themes emerge: reflation and the spread of populism. The shift away from monetary policy towards fiscal policy had already begun, and both US presidential candidates had promised fiscal stimulus. Trump offered greater stimulus (spending and tax cuts), and other policies on trade and immigration that …
US Dollar, Equities, and Commodities Firmer as Reflation Trade Takes Hold Read More »
The US dollar had another good week; rising against most of the major currencies. Among the majors, the relatively high yield and modest easing of near-term rate cut speculation allowed the New Zealand dollar to shine, rising a little more than 1% last week. The yen also strengthened in the four sessions last week for …
Golden Cross in Dollar Index is the Deadman’s Cross in the Euro Read More »