Tag Archives: 4.) Marc to Market

Overview: Despite disappointing German industrial output, where the 0.8% decline was twice expectations, the euro is holding above $1.07, where large options exist that are expiring over the next few sessions. The greenback is consolidating against the Japanese yen, where the fear of intervention has increased. Sterling remains on its back foot after yesterday's seemingly dovish comments by Bank of England Governor Bailey. Emerging market currencies are mostly...

Overview: Bonds and stocks are mostly heavier today and the dollar has turned mixed. Oil prices are consolidating after soaring to new highs since late last year on the longer than expected extension of Saudi Arabia's extra cut of one million barrels a day. Since July, it has been extending it by one month at a time. Yesterday, it extended it through Q4. Russia, who had previously indicated intentions on reducing its exports by 500k barrels, announced it was...

Overview:  Disappointing data in Asia and Europe has sent the greenback broadly higher. The strong gains posted before the weekend were mostly consolidated yesterday when the US and Canadian markets were on holiday. The rally resumed today. The Antipodeans and Scandis have been hit the hardest (-0.7% to -1.25%) but all the G10 currencies are down. The Swiss franc and yen are off the least (-0.35%-0.45%), and the euro and sterling have taken out their recent lows....

There is a sense of new divergence. Most economists, including the staff at the Federal Reserve, no longer think the US is recession-bound. Unprecedented in modern times, inflation has fallen sharply, and unemployment has not risen, and the economy appears to be enjoying its third consecutive quarter, and the fourth in the past five, above what the Federal Reserve regards as the non-inflationary pace (1.8%). At the same time, and despite being among the fastest...

Overview: Beijing's seemingly steady stream of measures to support the economy and steady the yuan are beginning to produce the desired effect. The yuan is snapping a four-week decline and the CSI 300 halted a three-week drop. Some economists estimate that the bevy of measures may be worth as much as 1% for GDP. The dollar is narrowly mixed ahead of the US employment data, which is expected to see the pace of job growth slow to around 170k. Of note, the Mexican peso...

Overview: The deluge of Treasury supply is nearly over for this week. On tap today are 4- and 8-week T-bills and $23 bln 30-year bonds to finish the quarterly refunding. The sales will come after the July CPI print that is expected to see the first year-over-year increase since last June. The market is going into the report with about a 15% chance of a Fed hike next month discounted. Meanwhile, September crude oil extended its recover from $80 seen on Tuesday to a...

Overview: The first leg of the US refunding was well received, with the three-year note being scooped up by investors, driving the yield below it was trading in the when-issued market. Today, the Treasury sells $38 bln 10-year notes, whose auctions have been less than stellar recently. The US 10-year yield reached 4.20% last week and is now straddling 4%. Italian bonds are also firm as the Italian government clarifies the new tax on banks' windfall profits. Other...

Overview: The combination of falling Chinese imports and exports, Moody's downgrade of ten US small and medium-sized banks is serving to squash risk appetites. Equities are weak, but bond markets are strong despite the surprise tax on Italian banks announced yesterday and the kick-off of the US $103 bln refunding today. Outside of Japan and Australia, Asia Pacific equity markets were lower led by a 1.8% drop in the Hang Seng and a nearly 2.2% loss of the mainland...

Overview: The US dollar is recovering today after it was sold following the jobs report before the weekend. It is enjoying a firmer bias against nearly all the G10 currencies. The dollar-bloc is faring best, while the Scandis are off close to 0.5%. Most emerging market currencies are also softer, with only a few Asian currencies edging higher today, including the South Korean won, Indian rupee, and Taiwanese dollar. With a stronger dollar and firmer interest rates,...

The US and China report July CPI figures in the coming days and they are likely moving in opposite directions. Headline US CPI is likely to rise for the first time since peaking in June 2022. China's CPI has been slowing and is likely to go negative on a year-over-year basis. It finished last year at 1.8% and in June was unchanged year-over-year. The divergence of policy is what is driving force of the exchange rate, and the    question is not really so much why the...