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Marc Chandler

Marc Chandler

He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.

Articles by Marc Chandler

Macro and Prices: Sentiment Swings Between Inflation and Recession

13 days ago

(On vacation for the rest of the month.  Going to Portugal.  Commentary will resume on June 1.   Good luck to us all.)The market is a fickle
mistress. The major
central banks were judged to be behind the inflation curve. Much teeth-gashing,
finger-pointing. Federal Reserve Chair Powell was blamed for denying that a 75 bp
hike was under consideration. Bank of Japan Governor Kuroda was blamed for keeping
the 0.25% cap on the 10-year Japanese Government Bond yield. Even though European
Central Bank President Lagarde had indicated previously that rates could be increased within weeks of
the end of the bond purchases, many observers embraced
it as a new sign that the ECB was belated to hike rates as early as July. For
the better part of three weeks, the swaps market

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Dollar and Yen Surge

16 days ago

Overview: Global equities are bleeding lower. Several
large markets in the Asia Pacific region, including Hong Kong, Taiwan, and
India are off more than 2%. Japan and Australian bourses fell by more than 1.5%.
Europe’s Stoxx 600 is off more than 2% and giving back the gains recorded in
the past two sessions plus some. US futures are extending yesterday’s loses. The
sharp sell-off of equities has given the sovereign bond market a strong bid. The
10-year US Treasury yield that had approached 3.20% on Monday has tumbled to
2.81% today. The 2-year yield had approached 2.75% yesterday after the
disappointing CPI report. It is now around 2.57%. European 10-year benchmark
yields are 10-14 bp lower. The dollar is flying, except against the Japanese
yen. The Antipodeans

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No Rest for the Weary

17 days ago

Overview: Risk appetites are improving on the margin.
Asia Pacific stocks still fell after the sharp losses on Wall Street on Monday.
Still, China, Taiwan and Indian equities traded higher. Europe’s Stoxx 600 is
snapping a four-day 6.5%+ slide and is up around 1.2% in late European morning
turnover. US equity futures are up over 1%. The 10-year Treasury yield that
pushed to 3.20% yesterday is a little above 3% now. European benchmark yields
are 5-7 bp lower and the peripheral premium has narrowed slightly. The US
dollar is trading mixed. The Australian dollar, yen, and Canadian dollar are steady, while the Norwegian krone and the Swiss franc are
laggards. Most emerging market currencies are firmer, including the
Indian rupee, which fell to record lows yesterday.

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The Week Ahead: US CPI and PPI Set to Soften

21 days ago

Fed’s 50 bp rate hike is behind us.  Another 50 bp hike is expected next
month. The April
employment report will do little to calm the anxiety about the "too
tight" labor market.  The decline in the participation rate was disappointing and this coupled with decline in Q1 productivity raies questions about the economy’s non-inflationary speed limit.    One of the fascinating
things about the markets is that sometimes the cause take place after the
effect.  This is an
interesting way to express the observation that investors anticipate, discount,
futures scenarios.  The dollar has been bought and fixed income sold on
ideas that the Fed had taken a hawkish turn.  The market now accepts that
the Federal Reserve will bring it Fed funds target rate within the

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Fed Day

24 days ago

Overview: The markets are mostly treading water
ahead of the FOMC decision later today. Tech stocks tumbled in Hong Kong
and the Hang Seng fell a little more than 1%, while India was the worst
performer in the region falling over 2% following an unexpected and intra-meeting
hike by the Reserve Bank of India.  It raised the repo rate to 4.4% from
4.0%.  Europe’s Stoxx 600 is a little lower and has been unable to close
the gap from Monday created from the lower opening.  US futures are
firm.  A gain today would be the third in a row for the S&P 500 and
NASDAQ and the longest streak since March.  The US 10-year yield is little
changed near 2.96%, while European benchmark yields are 3-4 bp higher.  The
US dollar is mostly heavier, with the dollar-bloc currencies

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RBA Surprises with a 25 bp Hike

25 days ago

Overview: The large bourses in Asia Pacific except Hong Kong eased. Japan and China’s mainland markets are closed for the holiday. Europe’s Stoxx 600 is up about 0.6%. It gapped lower yesterday and has not entered the gap today. US futures are a little softer. The 10-year Treasury nicked the 3%-mark yesterday and is just below there now. European benchmark yields are mostly 1-3 bp higher, but the UK Gilt yield has jumped eight basis points, and Australia’s surged 13 bp after the RBA delivered a larger than expected hike. The Australian dollar is the strongest of the majors, it is up about 0.70% near midday in Europe. The Norwegian krone and New Zealand dollar are slightly heavier. The other major currencies are a little firmer. Outside of the South African rand

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The Euro Continues to Stuggle to Sustain Even Modest Upticks, but Specs Still Long in the Futures

26 days ago

Overview: The US dollar begins the new week on a firm note ahead of the mid-week conclusion of the FOMC meeting.  Many centers are closed for the May Day holiday, making for thinner market conditions.  Equities are mostly lower in the markets that traded today.  This includes Japan, South Korea, Australia, and India in the Asia Pacific.  In Europe, the Stoxx 600, led by a decline in information technology,  industrials, and consumer discretionary sectors,  is snapping a three-day advance.  US futures are around 0.5% firmer.  The 10-year yield is around 2.94%, while European benchmark yields are mostly a little softer except for Italian bonds.  The Scandinavian currencies are bearing the brunt of the greenback’s gains, but the other major currencies are also a

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Did China’s Politburo Throw Markets a Lifeline?

29 days ago

Overview: Speculation that a midday statement by
China’s Politburo signals new efforts to support the economy ahead of  next
week’s holiday appears to have stirred the animal spirits.  The unusual
timing of the statement helped spark a rally in Asia-Pacific that lifted most
of the large market by more than 1%.  Europe’s Stoxx 600 has nearly completed
the gap created by Monday’s sharply lower opening. It is rising for the third
consecutive session.  US futures are, however, struggling, after some
earnings disappointments.  The 10-year yield was virtually flat on the
week coming into today and is up five basis points to 2.87%.  European benchmark yields are up 2-4 bp. The dollar is heavier across the board.  Among the majors, the Scandis and
Australian dollar are

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China’s Covid Sends Commodities Lower and helps the Dollar Extend Gains

April 25, 2022

Overview: Fears that the Chinese lockdowns to fight Covid, which have extended for four weeks in Shanghai, are not working, and may be extended to Beijing has whacked equity markets, arrested the increase in bond yields, and lifted the dollar. Commodity prices are broadly lower amid concerns over demand. China’s CSI 300 fell 5% today and Hong Kong’s Hang Seng was off more than 3.5%.  Most of the major markets in Asia Pacific were off more than 1%. Europe’s Stoxx 600 is off around 1.9% after falling 1.4% last week. US futures are about 0.7%-0.8% lower. The S&P 500 fell last week for the third consecutive week, the longest losing streak in 18 months. The US 10-year Treasury yield is almost seven basis points lower at 2.83%. European benchmark yields are 4-6 bp

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The Yen Bounces after 13-Day Slide and BOJ Defends Yield Cap

April 20, 2022

Overview: The record-long yen slide has stalled just shy of JPY129.50, even though the Bank of Japan defended its Yield-Curve Control cap on the 10-year bond and will continue to do so for the next four sessions. The greenback fell to almost JPY128 before steadying. China again defied expectations for lower rates (loan prime rate), the yuan’s sell-off accelerated and slide to its lowest level since last October. Chinese and Hong Kong shares fell, but most of the other large markets Asia Pacific advanced. The Stoxx 600 is firmer in Europe, but US futures are off 0.5%-1.0%. The Swedish krona and Australian dollar lead the major currencies, all of which are stronger against the greenback through the European morning. Central European currencies may be aided by the

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Yen Blues

April 19, 2022

Overview: Benchmark 10-year bonds yields in the US and Europe are at new highs for the year.  The US yield is approaching 2.90%, while European rates are mostly 5-8 bp higher.  The 10-year UK Gilt yield is up nine basis points to push near 1.98%. The higher yields are seeing the yen’s losing streak extend, and the greenback has jumped 1% to around JPY128.45  The dollar is trading lower against the other major currencies but the Swiss franc. The dollar-bloc currencies and Scandis lead the move.  Emerging market currencies are mixed.  Of note central European currencies are mostly higher (the Polish zloty is the chief exception) and Asia Pacific currencies and the South African rand are softer.  Most of the large Asia Pacific equity markets, but China and Hong Kong

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Greenback Starts New Week on Firm Note

April 18, 2022

Overview: With many financial centers, especially in Europe, closed for the long holiday weekend, risk-appetites remain in check. Most Asia Pacific markets fell, and poor earnings from Infosys and Tata Consultancy, saw India pace the decline with a 2% drop. US futures are also trading with a heavier bias.  Interest rates remain firm. The US 2- and 10-year yields are up a couple of basis points to 2.47% and 2.85% respectively. China’s GDP inexplicable rose though March details were poor and the yield on the Chinese 10-year bond rose almost 3 bp to 2.80%. The dollar rises high. Despite more official expressions of concern by Japanese officials over the pace of the move, the dollar is rising for the 12th consecutive session against the yen and has reached a new high

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Rising US Rates Sends the Yen Lower, but 50 bp Hikes Didn’t Deter Kiwi and Loonie Selling

April 17, 2022

The dollar rose against the major currencies last week, but the British pound, which eked out a small gain in the holiday-shortened week. The weakest was the Japanese yen, where rising US yields exerts an irresistible tug lifting the dollar to new 20-year highs. Yet, the 50-basis point hikes from the Reserve Bank of New Zealand and the Bank of Canada did not prevent their currencies from succumbing to the greenback’s surge, falling around 1.1% and 0.35%, respectively. Surging inflation was insufficient to give the ECB an added sense of urgency, and a disappointed market took the euro to its lowest level since May 2020, slightly below $1.0760.
Dollar Index: The powerful rally extended last week, and the Dollar Index reached slightly above 100.75, its highest level

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Central Banks on a Preset Course Reduces Significance of High-Frequency Data

April 16, 2022

Arguably the most important data next week is the flash PMI. It is not available for all countries, but for those generally large G10 economies, the preliminary estimate is often sufficiently close to the final reading to steal its thunder. Moreover, and this applies to high-frequency data more broadly, given the overshoot of inflation in most counties, with some exceptions, notably in Asia, central banks appear to be on set courses. 
The near-term data are interesting if you are into that kind of thing, but the Federal Reserve and the Bank of Canada seem committed to bring the policy rate to neutral expeditiously.  The hawkish chord struck by the Bank of Canada has the market favoring 50 bp moves at its next two meetings.  It is difficult to see the market

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PBOC Trim Reserve Requirements: Delilvers Wet Noodle after Earlier Disappointment

April 15, 2022

After posting the daily analysis, the PBOC announced a 25 bp cut in required reserves. This is said to free up around CNY530 bln or around $83 bln. It may help explain the failure to cut the benchmark Medium-Term Lending Facility. Some rural banks may see a 50 bp cut in reserve requirements.
It seems like it is too small of  move to satisfy expectation or address the growing economic challenges. More monetary and fiscal stimulus will be necessary to help offset the economic crunch from the Covid-lockdowns and disruptions. The dollar firmed slightly against the offshore yuan (CNH) but remains softer on the day.

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BOJ Steps-Up its Efforts, US 2-10 Curve

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Good Friday

April 15, 2022

Overview: Most centers are closed for the holidays today. The Asia Pacific equity markets were open and moved lower following the losses on Wall Street yesterday. The weakness of the yen failed to underpin Japanese shares. China disappointed most observers by failing to cut the one-year medium-term lending facility rate (2.85%) and shares slipped. The dollar is mostly higher.  It is up for the 11th consecutive session against the Japanese yen. The euro fell to its lowest level in nearly two years yesterday (slightly below $1.0760) following the ECB’s meeting that failed to bring forward a change in guidance. Its recovery has been capped around $1.0830. The Antipodeans continue to trade heavily, while the Canadian dollar and Swiss franc have edged higher. The

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Short Covering in the US Treasury Market Extends the Yield Pullback

April 14, 2022

Overview: What appears to be a powerful short-covering rally in the US debt market has helped steady equities and weighed on the dollar.  Singapore and South Korea joined New Zealand and Canada in tightening monetary policy.  Attention turns to the ECB now on the eve of a long-holiday weekend for many members.  The tech-sector led the US equity recovery yesterday, snapping a three-day decline.  Most of the major markets in Asia Pacific advanced but Taiwan and India.  Europe’s Stoxx 600 is posting small gains for the second day, and US futures are little changed.  The 10-year Treasury yield is a little softer at 2.69%.  It peaked on April 12 near 2.83%.  The two-year yield is almost one basis point lower to about 2.34%.  It peaked on April 6 around 2.60%.  The drop

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New Day, Same as the Old Day

April 12, 2022

Overview: It is a new day, but with the continued rise in interest rates and weaker equities, it feels like yesterday. Only China and Hong Kong among the major markets in Asia Pacific resisted the pull lower.  Europe’s Stoxx 600 is off by more than 0.5% led by health care and real estate. It is the fourth loss in five sessions and brings the benchmark to its lowest level since March 18. US futures are flattish. Yesterday, the NASDAQ fell by more than 2% for the third session in the past five. The US 2- and 10-year yields are firm at 2.52% and 2.79%, respectively. European benchmark 10-year rates are up 1-2p. The 10-year JGB yield is drawing closer to the 0.25% cap. The greenback continues to draw support from the higher rates. Today, the Australian and New Zealand

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Equities Finding a Bid in Europe After Sliding in Asia Pacific

April 7, 2022

Overview:  The capital markets are calmer today.  The market is digesting the FOMC minutes, where officials tipped an aggressive path to shrink the balance sheet and confirmed an “expeditious” campaign to lift the Fed funds rate to neutrality.  Benchmark 10-year yields are softer, with the US off a couple basis points to 2.58%.  European yields are 1-3 bp lower.  After the equity losses in the US yesterday, including a 2.2% drop in the NASDAQ, Asia Pacific equities struggled.  The largest markets, Japan, China, Hong Kong, South Korea, and Taiwan all fell by over 1%, driving the MSCI Asia Pacific Index lower for the third consecutive session.  With the help of health care and utilities, the Stoxx 600 is posting modest gains after dropping 1.5% yesterday.  US

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RBA Drops “patience” to Send the Aussie Higher

April 5, 2022

Overview: The Reserve Bank of Australia hinted that it was getting closer to a rate hike.  The Australian dollar was bid to its best level since the middle of last year.  Australian stocks advanced in a mixed regional session while China and Hong Kong markets were closed for the local holiday.  BOJ Kuroda called the yen’s recent moves “rapid.”  The yen is sidelined today as the dollar weakens against other major currencies, led by the Antipodeans.  In addition to the yen, the Swiss franc and euro are also among the laggards.  European equites have edged higher and the Stoxx 600 is at its best level since mid-February.  US futures have turned lower in the European morning.   The US 10-year yield is around five basis points higher at 2.45%.  European yields are

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The Greenback has Struggled even as Rate Expectations Rise

April 3, 2022

The effectiveness of the Federal Reserve’s communication seems clear. The market has nearly 90 bp of tightening discounted here in Q2. This means that after a 25 bp hike to initiate the tightening cycle, the labor market’s strength will allow the central bank to accelerate the pace. By the end of the week, the market will also have a better idea of the timing and pace of the balance sheet unwind.
The March nonfarm payroll growth may have missed median estimates, but when coupled with the 95k upward revisions, including 72k in February, and other details (from the household survey), the report must be considered strong. The household survey found that 736k people found jobs, and the unemployment rate fell to 3.6% (from 3.8%), even though the participation rate

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Calmer Markets: Hope Springs Eternal

March 29, 2022

Overview: Interest rates continue to rise, but equities are looking through it today and the dollar is drawing less succor. Asia Pacific equities were mostly higher. With half of Shanghai in lockdown, Chinese equities were unable to join the regional advance. Europe’s Stoxx 600, led by energy and consumer discretionary sectors, is rising for the third consecutive sessions. US futures have a small upward bias. The US 10-year yield is up a few basis points to 2.50%, while the 2-year yield is up around five basis points flattening this part of the curve to less than 10 bp. Europe’s 10-year benchmarks are 8-9 bp higher. The BOJ defended the 0.25% cap of the 10-year bond. The greenback is softer against all the major currencies today but the Swiss franc. The Scandis

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Caution: Trends in the Foreign Exchange Market

March 28, 2022

The recent themes in the
foreign exchange market continued last week. On the one hand, the dollar-bloc
currencies and Norwegian krona trended higher, while the euro, and especially
the yen, traded heavier. On the other hand, although some critics argued that the Fed’s 25
bp rate hike earlier this month was too timid, the Fed is signaling it could
accelerate the pace. The interest rate adjustment continued in dramatic fashion.

The Fed funds futures imply
almost a 77% chance of a 50 bp move at the next meeting (May 4). The general resilience of the US
economy, the tight labor market (with weekly initial jobless claims falling to
new lows since the late 1960s) and upticks in the flash PMI may embolden the
Federal Reserve.  The two-year note yield has risen by 50 bp

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US Jobs, EMU CPI, Japan’s Tankan, and China’s PMI Highlight the Week Ahead

March 27, 2022

This year was supposed to be
about the easing of the pandemic and the normalization of policy. Instead, Russia’s invasion of Ukraine threw a
wrench in the macroeconomic forecasts as St. Peter’s victories broke the
brackets of the NCAA basketball championship pools. The war has pushed up the
price of energy, metals, and foodstuffs, which seemed to be advancing prior to
the conflict.  High-frequency economic data
are important because of the insight generated about the economy and the possible impact on policy.  However, in the current context, Fed, ECB, and BOJ policy
seems to be looking past the upcoming reports.  Fed Chair Powell’s recent
comments underscore the risk of a 50 bp hike as early as the next FOMC meeting (May
4). A consensus appears to be forming,

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Cautious Markets after China Disappoints

March 21, 2022

Overview: Ukraine’s Mariupol refuses to surrender as the war is turning more brutal according to reports. Iran-backed rebels in Yemen struck half of a dozen sites in Saudi Arabia, driving oil prices higher. China’s prime lending rates were unchanged. The MSCI Asia Pacific Index, which rallied more than 4% last week, traded heavily today though China and Taiwan’s markets managed to post small gains. Tokyo was closed for the spring equinox. Europe’s Stoxx 600 is steady after rising 5.4% last week.  US futures are trading softer. Last week, the S&P 500 rallied 6.2%. Benchmark yields in Europe and the US are 2-4 bp higher, which puts the US 10-year Treasury near 2.18%. The greenback is mixed with the euro and Swiss franc posting minor gains. However, the dollar-bloc

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FX Daily, March 17: Investors are Skeptical that the Fed can Achieve a Soft-Landing. Can the BOE do Better?

March 17, 2022

Swiss Franc
The Euro has risen by 0.14% to 1.0387

EUR/CHF and USD/CHF, March 17(see more posts on EUR/CHF, USD/CHF, ) Source: – Click to enlarge
FX Rates
Overview: The markets continue to digest the implications of yesterday’s Fed move and Beijing’s signals of more economic supportive efforts as the Bank of England’s move awaited. The US 5–10-year curve is straddling inversion and the 2-10 curve has flattened as the Fed moves from one horn of the dilemma (behind the inflation curve) to the other horn (recession fears). Asia Pacific equities extended yesterday’s surge. The Hang Seng led the charge with a 6.7% gain. Taiwan’s benchmark rose 3% and the Nikkei gained 2.5%.  Europe’s Stoxx 600 is posting small gains and US futures are paring

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Fed Delivers Hawkish Hike

March 16, 2022

The Federal Reserve hiked the Fed funds target rate by 25 bp as widely anticipated. It clearly signaled it was beginning an ongoing hiking cycle. The FOMC statement also indicated the balance sheet roll-off would begin at a coming meeting. The uncertainty posed by Russia’s invasion of Ukraine was acknowledged, but the FOMC recognized that in the first instance it boosts price pressures while also weakening growth. There was one dissent. The noted hawk, St. Louis Fed President Bullard favored a 50 bp move.
Nevertheless, the hawkish implication of the Fed’s move was clear. The new projections see 150 bp of additional tightening this year, and the terminal rate is seen at 2.8% up from 2.1% in December. This is above what is regarded as the long-term equilibrium

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China and Hong Kong Stocks Plummet, Yields Soar

March 14, 2022

Overview: While the World Health Organization debates about downgrading Covid from a pandemic, the rise China and Hong Kong cases is striking.  A lockdown in Shenzhen and restrictions in Shanghai, coupled with a record fine by PBOC officials on Tencent drove local stocks sharply lower.  China’s CSI 300 fell 3% and a measure of Chinese stocks that trade in HK plunged more than 7%.  The Hang Seng itself dropped 5%.  Covid in China and Hong Kong adds to the risk of more supply chain disruptions.  Europe’s Stoxx 600 is up about 1.6%, led by financials and industrials.  US futures are 0.5%-0.7% better.   Bond markets are sliding.  Yields are 8-10 bp higher in European.  The US 10-year Treasury yield is near 2.10%.  It rose slightly more than 25 bp last week and is up

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Risk Assets Given a Reprieve

March 9, 2022

Overview: US equities failed to sustain early gains yesterday, but risk appetites have returned today.  Asia Pacific equities had a poor start, with Chinese and Japanese indices losing ground, but the equity benchmarks in Taiwan, Australia, India, and most of the smaller markets traded higher.  Taiwan’s 1.1% gain is notable as foreign investors continued to be heavy sellers.  Europe’s Stoxx 600 is snapping a four-day drop with an impressive 3.3% gain, led by the financials, consumer discretionary, and information technology.  US futures are trading 1.5-2.0% better.  We note that crypto has rallied strongly as well.  Benchmark yields are rising.  The US 10-year yield is up five basis points to 1.90%.  European yields are 2-6 bp higher.  China and Australia’s

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Vladimir Nogoodnik Roils Markets

March 7, 2022

Overview:  The economic disruption seen since the US warning of an imminent Russian attack on February 11 continue to ripple through the capital and commodity markets.  Equities are being slammed.  Most Asia Pacific bourses were off 2-3% today. Europe’s Stoxx 600 gapped lower ad has approached February 2021 levels, orr about 2.6% today.  US futures are around 1.5% lower. The reaction in the major bond markets is subdued.  The US 10-year yield is near 1.72%, off about 10 bp from a week ago.  European benchmark yields are mostly firmer after falling 15-20 bp last week.  In the foreign exchange market, the dollar-bloc currencies continue to show resilience, while the European complex remains under pressure.  The Swedish krona continues to underperform.  It is off

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