Overview: Global equity markets are stabilizing today, and the dollar is once again on its back foot. Chinese markets led a mixed regional performance with a 2%-3% gain, while South Korea and Hong Kong markets also advancing. The strength of the yen appears to weigh on Japanese shares. The Nikkei fell for the fourth consecutive …
The Federal Reserve moves to center stage next week. Outside of the US and Chinese inflation measures, it looks to be a relatively light week in terms of high-frequency economic data. Investors are still ruminating over the surprising jobs report (gain of 2.5 mln jobs vs. forecasts for 7.5 mln loss). Yes, there were classification …
Fed Moves Back to Center Stage as Transmission Mechanism is Challenged Read More »
Overview: The equity and bond rally in North America yesterday carried over into today’s session. With some notable exceptions, like China, Taiwan, Australia, and Indonesia, most bourses in Asia Pacific and Europe traded higher. US shares are little changed in early Europe after the S&P 500 rose to new record highs. The US 10-year Treasury …
1. As soon as it was clear that the ECB was not easing today, the euro began to recover, after making a marginal new low for the year (just above $1.11). 2. Draghi made it clear that easing was going to be delivered in September and on several fronts including rates (with mitigating measures like …
Overview: Risk-taking was bolstered by the dramatic shift in Draghi’s rhetoric less than two weeks after the ECB meeting and a Trump’s tweet announcing that there was going to be an “extended” meeting between him and Xi at the G20 meeting and that the respective staff would begin coordinating. It was later confirmed by the …
Overview: There is a nervous calm in the capital markets. Yesterday’s rally in US shares failed to excite global investors. China, Hong Kong, and Taiwan markets fell, while Japan was mixed. Foreign investors continued to sell Korean shares, but the Kospi rose. European shares narrowly mixed, leaving the Dow Jones Stoxx 600 little changed. There …
The Federal Reserve, like other central banks, is conducting a comprehensive review of the monetary policy framework. In recent day, for example, former NY Fed President Dudley suggested that the Fed may want to consider dropping the Fed funds target altogether as the interest paid on reserves is the real ceiling on short-term rates and the …
Setting the Record Straight: A Letter to and from the Fed on the Inflation Target: Read More »
Overview: The May Day holiday has shut most markets in Asia and Europe, making for subdued market action. Equity markets that are open, like Australia and the UK, advanced and US shares are trading higher helped by Apple’s upbeat forecasts and sales that beat expectations. Indeed, there is a risk that the S&P 500 gaps …
The Federal Reserve sounded more dovish than many expected and this prompted a 5-7 bp drop in US rates, and the dollar fell to new lows for the week against many of the major currencies. The median Fed forecast now anticipates no hike this year but one next year. The Fed will also taper the …
FOMC: Above Trend Growth Requires Continued Monetary Support Read More »
The main issues for investors have not changed. There are three dominant ones: Trade, growth, and Brexit. Unfortunately, there won’t be any closure in the week ahead, and that may make short-term participants reluctant to turn more aggressive. The US reported exceptionally poor December retail sales and January industrial output figures. Growth forecasts were adjusted. …