Tag Archives: 4.) Marc to Market

Overview: The US dollar is beginning the new week and month on a firm note. It is rising against all the G10 currencies and nearly all the emerging market currencies. US-President-elect Trump's threat to BRICS if they abandon the dollar is symbolic than substantive, as we have argued, despite the occasional claim to the contrary, a BRICS currency is not realistic, and the China has little interest in fostering another competitor to the yuan. Still, like being told...

The trends were already entrenched before the US election and continued through most of last month. The trend toward higher rates and higher equities stalled, while the dollar remained strong. Investors and business continue to wrestle with the implications of the Republican sweep in the US elections.There are two broad issues that are the source of uncertainty. The first is the broad tariff Trump has advocated on the campaign trail: 60% on China and 10-20% on rest...

Overview: The US dollar has a softer profile today. All the G10 currencies are higher, led by 1%+ surge in the yen amid heightened speculation of a rate hike next month, while the US 10-year yield is near 4.25% today, the lowest since the election. Although the Reserve Bank of New Zealand allows for another half-point cut after delivering the second one this year earlier today, the New Zealand dollar has popped up amid sell the rumor buy the fact type of activity....

Overview: As some market pundits were debating about a possible grand deal between the US and China. In exchange for a lighter tariff regime, Beijing would accept yuan appreciation. As far-fetched as such scenario may be, it was predicated on ideas that people like the Bessent, the Treasury Secretary-nominee, was pragmatic. Trump's comments hit in early Asia Pacific turnover specifically cited a 25% tariff on all product from Canada and Mexico and 10% more on China...

Overview: The selection of Scott Bessent, the hedge fund manager as next US Treasury Secretary was greeted euphorically in the capital markets:  one of their own and, arguably, like many of new economics team could have been picked in any Republican administration. Risk appetites have been animated. Still, we suspect market positioning may have led to an exaggerated response. The dollar has been sold. Stocks have bought. The euro is leading the G10 currencies...

Overview:  Escalating tensions in Europe and comments from Bank of Japan Ueda that spurred speculation of a December hike are the main drivers of the foreign exchange market today. The yen is the strongest of the G10 currencies, up about 0.65%, while the euro is the weakest, off a little more than 0.25%, and sterling is down almost as much. Most of the other G10 currencies are little changed. Led by central European currencies, most emerging market currencies are...

Overview: US dollar and rates are firmer today. All the G10 currencies are lower, led by the Japanese yen. The UK reported firmer than expected CPI and this may have deflected some of the selling pressure away from sterling, which is off less than 0.2% to put it atop the pack ahead of the US open. Nearly all the emerging market currencies are lower led by central European currencies, the Mexican peso, and South African rand. As anticipated, China's prime lending...

Overview: Within hours of the US giving permission to Ukraine to use US weapons to strike Russian territory, which it did, Moscow announced a change it is nuclear doctrine that allow for the use of nuclear weapons against a conventionally armed adversary that is backed by nuclear powers. This follows on the heels of the failure of two telecom cables yesterday (Germany-Finland and Sweden-Lithuania). This escalation is roiling the capital markets. Bonds are rallying....

Overview: The US dollar has begun the new week consolidating in a mixed fashion against the G10 currencies. Bank of Japan Governor Ueda remains circumspect and did not provide guidance about next month's central bank meeting. Without positive guidance, the market sold the yen, but the swaps market shows about 13 bp of tightening has been discounted, up a couple of basis points from a week ago. Leave aside the New Zealand dollar, which is also under pressure ahead of...

There are powerful forces in the capital markets, and they do not appear exhausted even if there is some near-term consolidation. The Dollar Index has risen for seven weeks, which is to say that it has not fallen on a weekly basis so far here in Q4. The US two-year yield has risen for the past four weeks and six of the past seven. It has surged from about 3.55% at the end of September to 4.38% last week. The US 10-year yield has fallen in only two weeks since...