SNB & CHF

Summary: Policy outlook is clear: ECB and BOJ review next month, FOMC still looking for opportunity. Inventory cycle making quarterly US GDP forecasting difficult, but it looks like re-acceleration still the more likely scenario than recessions. Why didn’t European bank stress tests results have more impact? The drip-feed of high frequency economic data from the major economies slows in the week ahead. The data...

EM ended last week on a firm note, despite the stronger than expected July jobs report.  As we suspected, one strong US data point is not yet enough to derail the dovish Fed outlook.  With the RBA and BOE cutting last week and the RBNZ expected to cut this week, the global liquidity backdrop remains supportive for EM and risk. Looking at individual country risk, we note that investors must remain discerning.  We...

Negative Consumer Financing Rates in Germany Things are increasingly upside down in the brave new centrally planned world: thanks to negative deposit rates central banks have put an explicit cost on saving, while in various instances, such as taking out a mortgage in Denmark and the Netherlands, the bank actually pays the borrower, thus rewarding living beyond one’s means. Curiously, it was just a month ago when an...

Swiss Franc Currency Index Our weekly comparison with the dollar index: The positive performance of the Swiss franc index was reversed on Friday. Finally the dollar index had a better week than the Swiss Franc index. Click to enlarge. Swiss Franc Currency Index (3 years) The Swiss Franc index is the trade-weighted currency performance (see the currency basket) On a three years interval, the Swiss Franc had a...

For a period that included a BOJ and FOMC meeting and the US GDP, speculators in the currency futures were unusually quiet.  Summer holidays with family may be more important. Of the 16 gross currency futures speculative positions we track, 12 of them were less than 5k contracts. There was only one gross position adjustment more than 10kcontracts.  Euro bears covered 13.2k gross short euro contracts,...

Summary: Underlying concerns about US labor market ease after two robust reports. Sept Fed views will not change much. Canada’s data is disappointing, BOC optimism may be challenged. United States Nonfarm payrolls The market’s angst over the underlying trend in the US labor market eases with the help of the second consecutive robust report. The 255k rise in non-farm payrolls was well above expectations, and...

  Right on the Money OUZILLY, France – It is not often that you get investment advice from a presidential candidate. It is even rarer that you get good advice But yesterday, Republican presidential candidate Donald Trump gave investors both good advice and good analysis. Bloomberg has the report: Donald Trump on Stocks Photo credit: Michael Nagle / Getty Images The Donald dispenses investment advice. “Better get out...

Swiss Franc As usual, when U.S. data is good, then the EUR/CHF appreciates. Click to enlarge. FX Rates The focus is squarely on the US employment data today, ahead of which the capital markets are mostly consolidating yesterday’s Bank of England inspired moved. The Australian and New Zealand dollars, alongside sterling, which is up about half a cent after losing two yesterday. The RBA’s monetary policy statement...

BofA’s Michael Hartnett points out something amusing, not to mention diabolical: following the rate cuts by the BoE & RBA this week, “global central banks have now cut rates 666 times since Lehman.” One would think this attempt by central banks to push everyone into risk assets, certainly the Swiss National Bank which as we showed yesterday has increased its US equity holdings by 50% in the first half of 2016 … …...

India’s upper house approved the creation of a Good and Services Tax (GST) The Polish government softened its stance on the proposed Swiss franc loan conversion plan Support for South Africa’s ruling African National Congress (ANC) appears to have fallen below 60% for the first time ever Brazil’s Senate impeachment committee recommended putting President Rousseff on trial In the EM equity space as measured by MSCI,...