SNB & CHF

In the sessions before and after the UK referendum speculators in the currency futures did three things. First, they generally reduced exposure.This means gross longs and short positions were reduced. Of the 16 gross speculative currency futures positions we track, 12 fell. Euro: Speculators were divided Second, speculators were divided about what to do with the euro. The bulls added 20.9k contracts to their gross long...

Graham Summers says that central banks have lost control and investors are crazy. They pay the Swiss government for the right to own their bonds. One point is missing: Swiss rates are “more negative than others”, because investors expect a slow appreciation of the Swiss franc. Sometimes it’s critical to look clearly at the big picture. The big picture is that the financial world has allocated capital… trillions of...

Connecting Dots BALTIMORE –  U.S. stocks bounced on Tuesday, with the Dow up 269 points [and even further on Wednesday, ed.]. Was that all there was? Is the “Brexit” scare over? We don’t know… but we’re going to take a pause today. Instead of trying to connect the new dots, we’re going to take a look at the old dots we’ve already strung together. We’ve been connecting the dots every day (except weekends) for the last...

Swiss Franc Currency Index The Swiss franc (-0.3%) and the yen (-0.5%) were the worst performers as so-called “safe haven” buying was reversed during the week after Brexit. But the Swiss Franc index is still stronger in the last month. Via Financial Times. Click to enlarge. Swiss Franc Currency Index (3 years) The Swiss Franc index is the trade-weighted currency performance. On a three years interval, the Swiss...

The Pool of Real Wealth Last Thursday, the people of Britain voted in a referendum to leave the European Union (EU). Most commentators view Britain’s exit (“Brexit”) from the European Union as bad news for economic growth in the UK and the euro zone. As a result, it is argued, the growth rate in the rest of the world will be also badly affected. It is more likely that, whether the pace of real economic growth over time...

  Investors have realized Brexit isn’t the end of the world. First, because they think it won’t really happen. After all, elites can fix elections, buy politicians, and control public policy… surely, they can fix this! A letter in the Financial Times reminds us that Swedish voters cast their ballots against nuclear power in 1980. The government just ignored them, doubling nuclear power generation over the next 36...

Indonesia’s parliament approved a tax amnesty bill Korea announced KRW20 trln ($17 bln) in fiscal stimulus Czech President Zeman said a referendum on EU and NATO membership should be held Russia ended its tourism ban to Turkey Brazil’s central bank is sending hawkish signals Banxico hiked rates by a larger than expected 50 bp to 4.25% Markets In the EM equity space as measured by MSCI, Brazil (+7.9%), Mexico...

  The Only Move for the Fed is Talking Down the Dollar The Fed has no more maneuvers other than to jawbone the dollar lower. Because for a variety of reasons a strong dollar, in the current market environment, is akin to tighter monetary policy. The Eccles Building US dollar index over the past 2 years And right now, in the wake of Brexit, tighter monetary policy is clearly not an option. Plus, a stronger dollar (by...

Brexit Volatility remained high with markets rebounding from last week’s heavy losses as tensions began to ease following the UK referendum. Bargain hunters took advantage of badly beaten up sectors on bets that central banks would ride to the rescue of investors by providing additional stimulus to avert disaster. Mark Carney, governor of the Bank of England, reassured markets that a rate cut could come as early as...

EUR/CHF stronger in Brexit week The EUR/CHF finished the week after Brexit with slight improvement of 0.18% (see the FX performance table below). The scare mongering by the Swiss media was misplaced.  The euro even recovered from a dip after BoE governor Carney’s comments on Thursday. We do not see strong SNB interventions at this elevated price level. We judged that the interventions happened below 1.08. Click to...