Risk-appetites and, by implication, the capital markets entered a new phase around June 5 when the US reported an unexpectedly strong jump in the May non-farm payrolls. The risk assets had been rallying since mid-March in anticipation of an economic recovery and fueled by the massive liquidity provided by central banks and the spending plans …
Overview: Another late sell-off in US shares, this one perhaps related to the sobering assessment by the leading medical adviser for the Trump Administration about the risks of opening too early, failed to deter investors in the Asia Pacific region. Although Japanese shares slipped, most other markets rose. India led the way (~2%) after a fiscal …
Will Powell have any more Luck Pushing against Negative Rate Expectations in the US? Read More »
Too much of a good thing is bad. That, in a nutshell, is an important insight that Hyman Minsky offered about the financial sector, but has broader application. The low volatility that has been a characteristic of the capital markets for the past few years spurred financial innovation to profit from it. A broad range …
The Week Ahead: Recovering from Too Much of a Good Thing? Read More »
The short-term solution reached last month to extend the US federal government’s funding expires on Thursday, February 8. Leaders from both parties say they want to avoid another partial closure. Last month, parts of the federal government were closed for three days, which is about par for the course (around half of the government’s 19 …
Will the US Government Shutdown Again? What to Watch Read More »
With healthcare reform sidelined, for the time being, the legislative emphasis has turned to tax reform. However, before tax reform, Congress must do two other things. The debt ceiling must be raised and spending authorization for the new fiscal year beginning October 1 is needed. Although Treasury Secretary Mnuchin has called for a clean bill …
Treasury Quarterly Refunding Announcement and Update on Ultra-Long Bond Read More »
The rancorous debate over health care reform sucked the oxygen away from other pressing issues before Congress. The savings from the reforms was seen as a critical part of tax reform. The tax reform strategy is the same as with health care reform. A small group of Republicans, representing both houses of Congress and the …
The health care reform efforts have disappointed. The House version has been all but forgotten about as the focus has shifted to the Senate. The challenge in the House has been repeated in the Senate, namely that the differences between different parts of the coalition embodied in the Republican Party are preventing the emergence of …
It is not just the fear that the investigations into Russia’s attempt to influence the US election will distract from the Trump Administration’s economic program. It is also that the economic agenda itself seems is less clear. That China was not cited as a currency manipulator is no major surprise. Bush and Obama also made …
The Federal Reserve hiked rates in March. Whatever gradual hikes mean, it seems to preclude moves in back-to-back meetings. There are two chances of a May hike: Slim and none and Slim left town. June is a different story. Anticipating the economy finding better traction, and a non-disruptive conclusion of the French presidential election, we …
Monetary Policy is Important, but US Fiscal Stance Moving Center Stage Read More »
The capital markets are becalmed, and the US dollar is in narrow trading ranges. Month-end considerations are at work, but the key event is much-awaited speech US President Trump to a joint session of Congress this evening (early Wednesday in Asia). The hope is that he provides the policy signals that allow the dollar to …