SNB & CHF

The most important on China.

With many equity markets having fallen 20% from their peaks, meeting a common definition of a bear market, investors, analysts, and journalists understandably seek a narrative that gives it meaning.  At the very start of the year, the culprit singled out was drop in Chinese shares and the yuan.  However, the yuan has stabilized as the PBOC drew down another $100 bln of reserves in January to help ease the pressure what appears to at least in part be a speculative attack by hedge funds (who...

With many equity markets having fallen 20% from their peaks, meeting a common definition of a bear market, investors, analysts, and journalists understandably seek a narrative that gives it meaning.  At the very start of the year, the culprit singled out was drop in Chinese shares and the yuan.  However, the yuan has stabilized as the PBOC drew down another $100 bln of reserves in January to help ease the pressure what appears to at least in part be a speculative attack by hedge funds (who...

In December 2015, the seven year Joseph cycle ended with a Fed rate hike. These lean years of the Joseph cycle started in December 2008 when the Fed lowered rates to the current level. We think that in the next seven year cycle, even the risk-averse Swiss investors will buy more foreign assets, not only the central bank and speculators. Different crises have passed in the three parts of the world, the U.S. subprime, the euro crisis and the Emerging Markets crisis. The last one culminated...

In December 2015, the seven year Joseph cycle ended with a Fed rate hike. These lean years of the Joseph cycle started in December 2008 when the Fed lowered rates to the current level. We think that in the next seven year cycle, even the risk-averse Swiss investors will buy more foreign assets, not only the central bank and speculators. Different crises have passed in the three parts of the world, the U.S. subprime, the euro crisis and the Emerging Markets crisis. The last one culminated...

The latest Commitment of Traders report covers the week ending February 2 that included the FOMC meeting and the BOJ's surprise cut.  There was also speculation of a potential deal between Russia and OPEC to cut output.  Speculative position adjustment in the futures market was more limited than one might have expected. Speculators cut 10.5k gross long yen contracts, leaving 82.5k contracts.  The bears added only 2.3k contracts to their gross short position, giving them 44.9k contracts....

The latest Commitment of Traders report covers the week ending February 2 that included the FOMC meeting and the BOJ's surprise cut.  There was also speculation of a potential deal between Russia and OPEC to cut output.  Speculative position adjustment in the futures market was more limited than one might have expected.   Speculators cut 10.5k gross long yen contracts, leaving 82.5k contracts.  The bears added only 2.3k contracts to their gross short position, giving them 44.9k...

The US dollar traded higher before the weekend with the help a fairly robust jobs report.   Although the jobs growth itself was somewhat disappointing, the details were constructive:  More people working a longer work week and earning more.   The participation rate rose, and the unemployment rate (U-3) fell.  The Atlanta Fed GDPNow tracker increased to 2.2% in Q1 16 from 1.2% at the start of the week. Despite the pre-weekend gains, the greenback lost ground against all the major...

The US dollar traded higher before the weekend with the help a fairly robust jobs report.   Although the jobs growth itself was somewhat disappointing, the details were constructive:  More people working a longer work week and earning more.   The participation rate rose, and the unemployment rate (U-3) fell.  The Atlanta Fed GDPNow tracker increased to 2.2% in Q1 16 from 1.2% at the start of the week.  Despite the pre-weekend gains, the greenback lost ground against all the major...

Chinese markets will be closed next week for the Lunar New Year celebration.  However, over the weekend, China will report its January reserve figures.  The market suspects that the PBOC burnt through another $120 bln of reserves.   China's reserves stood at $3.81 trillion in January 2015.  They are expected to stand near $3.21 trillion as of the end of last month.    This draw down, coupled with its trade surplus and the pressure on the currency have led many to express concerns about...