SNB & CHF

The Federal Reserve modified its stance yesterday without changing rates.  It is not just about how fast the Fed sees itself normalizing monetary policy but also where the level of the equilibrium rate. The FOMC statement, but especially the officials’ forecasts (dot plots) effective unwound the impact of the earlier Fed talk of the likely appropriateness of a rate hike this summer.  Although the Fed did not rule out a...

The KOF Swiss Economic Institute defines itself as one of the leading economic “think tanks” in Switzerland. In this prospect, KOF (acronym for the German word “Konjunkturforschungsstelle”, which means business cycle research institute) aims to play two roles, one as a mediator between a broader public (politics, society) and the research community, and one as a leading platform for economists, especially within...

First The Telegraph, then The Sun, and today The Spectator all came out on the “Leave” side of the Brexit debate. However, perhaps even more shocking to the establishment is the CIO of a major bank’s asset management arm dismissing the apparent carnage that Cameron, Obama, and Osborne have declared imminent, warning that, “many articles on the Brexit vote overstate its risks and consequences.” As JPM’s Michael...

Swiss Franc The Swiss Franc was today on the back-foot against the euro, while the FOMC helped him to rise against the dollar. Yesterday Swiss producer prices were published. Negative changes in producer prices in 2015 reduced  the Swiss franc overvaluation in terms of the Real Effective Exchange strongly. Now, however, changes producer prices are approaching zero again. FOMC The FOMC meeting later today,...

The Federal Reserve anticipated a more gradual tightening path going forward. This weighed on the dollar and lifted equities. August Fed funds futures implies less of a chance of a hike next month. It is now consistent with an 8% chance of a hike, which is less than half the probability assigned at the end of last week.The immediate reaction was driven by the Fed’s dot plots.  Although the median continues to...

Following today’s FOMC meeting, the central banks of Japan, Switzerland, and the UK meet tomorrow.  The SNB will keep its powder dry to be able to respond to the results of the UK referendum if needed.  The Bank of England is also on hold. The outlook for the BOJ is more in dispute.  The strength of the yen and deflationary pressures encourage some to look for Governor Kuroda to ease policy.  In fact, a little more than...

As Brexit appears to gathering pace among British voters, Bloomberg Briefs interviews Hung Tan, executive managing director at the Institute of International Finance in Washington, DC., to understand the global impact of a decision by Britain to leave The EU…    Q: What would happen if Britain voted to leave the EU?  A: It is not Lehman in the short term in terms of markets being in a panic or chaotic mood, because the...

  Godfrey Bloom, back in his days as UKIP whip Photo credit: Reuters Introductory Remarks – About Godfrey Bloom [ed note by PT: Readers may recall our previous presentation of “Godfrey Bloom the Anti-Politician”, which inter alia contains a selection of videos of speeches he gave in the European parliament. Both erudite and entertaining, Mr. Bloom constantly kept the etatistes of the EU on their toes.] Before becoming...

“The Swiss Franc was the strongest performer, EUR/CHF has fallen to 1.08 by 0.8%”. A spate of opinion polls showing a tilt toward Brexit, and the leading UK newspaper urging the Leave vote on the front page,  keep the global capital markets on edge.  Equities are lower, though of note ahead of the MSCI decision first thing Wednesday in Asia, Chinese shares eked out a small gain.  Core bond yields are 4-5 bp lower, which...

  The Sharp Move in the VIX Accelerates In Monday’s trading session, the upward move in the volatility index VIX (which measures the implied volatility of SPX options) continued unabated, vastly out of proportion with the move in the underlying stock index. “Brexit” fears continue to grow, which has apparently been the driving force behind this move. The “Brexiteers” are gaining support as the referendum date draws...