Tag Archives: 4) FX Trends

Overview: The holiday continues. In the Asia Pacific region, Hong Kong, Australia, and New Zealand, and the Philippines markets were closed. The regional bourses advanced but China.  European markets remain closed. US equity futures are narrowly mixed. The 10-year US Treasury yield is off nearly three basis points to about 3.36%. The dollar is trading quietly mostly within ranges seen before the weekend. It is slightly softer against most of the G10 currencies, but...

Bank shares rose in Japan and Europe for the second consecutive week, but the KBW US bank index fell nearly 2% after increasing 4.6% in the last week of March. Emergency borrowing from the Fed remains elevated ($149 bln vs. $153 bln). Bank lending has fallen sharply (~$105 bln) in the two weeks through March 29. This appears to be a record two-week decline. Commercial and industrial loans had fallen a little in the first two months of the year (before the bank...

Overview:  Activity throughout the capital markets remains light as most financial centers in Europe are closed for the Easter celebration. Hong Kong, Australia, New Zealand, and Indian markets were closed as well. Still, most of the equity markets in Asia Pacific advanced, led by South Korea's Kospi's nearly 1.3% advance. The market responded favorably to news that Samsung would cut its production of memory chips and shrugged off its smaller than expected profits....

Overview: There is a fragile calm in the capital markets today ahead of the long holiday weekend for many. The poor US economic data yesterday and third consecutive decline in the KBW bank index weighed on risk sentiment. Most of the large bourses in the Asia Pacific region fell, with Hong Kong and India notable exceptions. In Japan, the Topix bank index fell 1.1% after a 1.9% decline yesterday and is now lower on the week. Europe's Stoxx 600 is trying to snap a...

Overview: There are three themes today. First, the sharp decline in US rates seen yesterday (-14 bp on the two-year yield) on the back disappointing economic data seemed a bit exaggerated and the two-year yield has bounced back to almost 3.90% from around 3.81%. This appears to be helping the dollar consolidate today. Second, bank shares are coming under renewed pressure. The US KBW bank index fell almost 2% yesterday after a 0.5% decline on Monday. Today, the Topix...

Overview: Financial strains eased yesterday, and short-term yields jumped. The two-year US yield jumped 25 bp to pierce 4%. Yet, the dollar fell against most of the major currencies yesterday and is mostly softer today. Banking stress is ebbing. The Topix bank index snapped a three-day decline and jumped nearly 2% today to recoup the lion's share of its three-day decline. The Stoxx 600 index of EMU banks is extending yesterday's 1,7% advance. The AT1 ETF up about...

Overview: There did not appear to be any negative surprises over the weekend, and this is helping calm investors' nerves at the start of the new week. Deutsche Bank shares have recovered most of the pre-weekend loss in the German market, and Stoxx bank index is posting a gain for the first time in four sessions. The AT1 ETF is slightly softer. In Japan, the Topix bank index slipped around 0.5%, its fourth decline in the past five sessions. Asia Pacific equities were...

The banking crisis is the newest shock to roil the capital markets. Pragmatic action by central banks, governments, and the private sector has thus far been insufficient to allow investors to be confident that the problem is ring-fenced. Credit Suisse was a pre-existing problem that flared up to the breaking point. The government's offer to take the first CHF9 bln in losses and the controversial triggering of clauses allowing AT1 bondholders to be liquidated before...

Overview: The pendulum of market expectations has swung dramatically and now looks for 100 bp cut in the Fed funds target this year. That seems extreme. At the same time, the dollar's downside momentum has stalled, suggesting that the dollar may recover some of the ground lost recently as the interest rate leg was knocked out from beneath it. The euro twice in the past two days pushed through $1.09 only to be turned away. Similarly, sterling pushed above $1.23 but...

Overview:  The dollar remains under pressure following the Federal Reserve's rate hike. The market thinks it heard that the Fed was done hiking, even though Fed Chair Powell held out the possibility that "some additional firming may be necessary."  The Norwegian krone is the strongest of the G10 currencies today, up more than 1%, spurred by a 25 bp hike and a commitment to do more. The Dollar Index briefly traded below 102.00 for the first time since February 3. A...