Overview: The sharp sell-off in US equities and yields yesterday is spurring a mini-meltdown globally today. Many of the Asia Pacific markets, including Japan, Australia, Taiwan, and India, saw more than 2% drops, while most others fell more than 1%. The MSCI Asia Pacific Index snapped the four-day advance had lifted it about 2.8% coming into …
Global growth concerns spurred by disappointing PMI data and broadening trade tensions, as the US prepares to act against Europe to the full extent that WTO allows, drove the capital markets over the past week. The dollar was mixed. The yen, euro, sterling traded higher, while the Canadian dollar, Swiss franc and Swedish krona weakened. …
Streaking Markets–Euro has a 4-day Advance in Tow and the US 10-Year Yield, a 7-day Drop Read More »
Our hypothesis that the market had reached peak dovishness toward the Fed remains intact after the employment data. Job growth was the strongest since January. The participation rate and the unemployment rate ticked up. Average hourly earnings edged 0.2% higher, and, with revisions, maintained a 3.1% year-over-year pace, which is a bit disappointing. The jobs …
In Bizzaro Beauty Contest, the US is Still the Least Ugly Read More »
Since President Trump declared the end of the tariff truce with China in early May, an important focus for investors was the G20 meeting. It was only as it drew near was a meeting between the two heads of state confirmed. What was billed as an extraordinary meeting reportedly lasted less than 90 minutes, and …
Macro Update: Melodrama Subsides but Capriciousness Remains Read More »
I know some people who are always bullish gold. I am not. In fact, I often think I can find higher returning assets. However, I have recently have turned bullish gold, and while in Toronto on business, I was invited to the set of Bloomberg to discuss my change of heart. Many of the reasons …
Central banks are prepared to take fresh measures to strengthen and extend the business cycle primarily because price pressures are below what their predecessors thought would be acceptable levels. Draghi, speaking for the ECB, the Federal Reserve, and the Bank of Japan ratcheted up their concerns, which, even without new initiatives, were sufficient to drive …
News that despite the disappointing jobs growth and weaker earnings growth, the engine of the US economy–consumers–remain resilient helped lift the dollar, which retraced most if not all of the previous week’s losses. The dollar rose against all the major and most of the emerging market currencies. The Mexican peso was the best-performing currency, gaining …
USD Resilience in the Face of Aggressive Fed Easing Expectations Read More »
Investors have worked themselves into a lather. Equities crashed in Q4 last year amid on corporate earnings and concerns about growth. The Fed’s tightening decision in December was made unanimously. The above-trend growth, the preferred inflation measure was near target, unemployment was the lowest in a generation and real rates were historically low. There are …
The Federal Reserve has long been clear on the sequence of events as it innovated the playbook during the Great Financial Crisis. There would be a considerable period between when the Fed would finish its credit easing operations that involved purchasing Treasuries and mortgage-backed securities (MBS) and its first-rate hike. The normalization cycle would be …
A cry was heard last week when President Trump expressed displeasure with the Fed’s rate hikes. Some, like former Treasury Secretary Lawrence Summers, claimed that this was another step toward becoming a “banana republic.” Jeffrey Sachs, another noted economist, claimed that “American democracy is probably one more war away from collapsing into tyranny.” The line …
Great Graphic: US 2-year Premium Grows and Outlook for G3 Central Banks Read More »