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Tag Archives: Bank of Japan

Semblance of Calm Returns

(Business travel will prevent me from updating the blog for the next couple of days.  Thank you for your patience.  Good luck.) Overview: After extending last week’s moves yesterday, the capital markets are mostly calmer today. Sterling is firmer, as are UK Gilts. The dollar is mostly consolidating inside yesterday’s range. Equities are stable to higher. Most of the large markets in the Asia Pacific region, but India edged higher, led by a 1.45% gain in China’s CSI...

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Putin and Powell Lift Dollar

Overview: Between Putin’s mobilization of 300k Russian troops and Fed Chair Powell expected to lead the central bank to its third consecutive 75 bp hike later today, the dollar rides high. It has recorded new two-year highs against the dollar bloc and Chinese yuan, while sterling was sent to new lows since 1985. Asia Pacific bourses were a sea of red for the sixth decline in the regional benchmark in the past seven sessions. Surprisingly, Europe’s Stoxx 600 is...

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No One Wants a Recession, but Central Banks are willing to Take the Risk to Demonstrate Anti-Inflation Resolve

The week ahead is busy. Three G7 central banks meet, the Federal Reserve, the Bank of Japan, and the Bank of England. In addition, Japan and Canada report their latest CPI readings, and the flash September PMI are released.  There are three elements of the Fed's meeting that are worth previewing. First is the interest rate decision itself and the accompanying statement. Ironically, this seems to be the most straightforward. Even before the August CPI surprise, the...

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Greenback Softens, but Think Twice about Chasing It

Overview: Aside from political economic risks, three other challenges are emerging. First, the new sub-variant of Covid is spreading rapidly. BA5 reportedly is accounting for around 80% of the new cases. It is better able to evade antibodies from vaccines and earlier infections. Hospitalization rates are also climbing. Dining, retail, and travel may be impacted. Second, the World Health Organization declared monkeypox a global emergency. The US may make a similar...

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Italian Politics Complicate the ECB’s Task

Overview: The appetite for risk seen earlier this week is fading. Yesterday’s US equity gains helped lift most of the large markets in the Asia Pacific region, but China’s CSI 300 fell 1.1%, giving back most of this week’s gains as credit issues from the property sector haunt sentiment. Europe’s Stoxx 600 is trading heavily ahead of the ECB meeting outcome. US futures are also trading off. Benchmark 10-year yields are firmer with the US Treasury near 3.05%. European...

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The End Game Approaches

The pendulum of market sentiment swings dramatically.  It has swung from nearly everyone and their sister complaining that the Federal Reserve was lagging behind the surge in prices to fear of a recession.  On June 15, at the conclusion of the last FOMC meeting, the swaps market priced in a 4.60% terminal Fed funds rate.  That seemed like a stretch, given the headwinds the economy faces that include fiscal policy and an energy and food price shock on top of monetary...

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Risk Appetites Improve Ahead of the Weekend

Overview: Equities are higher and bonds lower as the week's activity winds down. Asia Pacific markets rallied, paced by more than 2% gains in Hong Kong and South Korea. Japan's Nikkei rallied more than 1%, as did China's CSI 300. Most of the large markets but South Korea and Taiwan advanced this week, though only China and Hong Kong are up for the month. Europe's Stoxx 600 is up 1.3% through the European morning, its biggest advance of the week and what looks like...

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Risk Appetites are Fickle

Overview: Yesterday’s strong US equity gains failed to carry over into today’s session. Japanese and Australian shares fared the best among the large Asia Pacific market, with the Nikkei off less than 0.4% and the ASX off less than 0.25%. However, China’s markets were off more than 1%, while Taiwan and South Korea indices slumped more than 2%. India is off nearly 1.5%. Europe’s Stoxx 600 is down 1.5% and is giving back all of its gains in the past three sessions. US...

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Equities Jump, Dollar Slips, and European Yields Drop

Overview: Stocks are rallying. Nearly all the large bourses in the Asia Pacific region rose with China being the noted exception. In Europe, the Stoxx 600 is up over 1% to post gains for the third consecutive session, the longest advance this month. US futures are up around 2% as they return from yesterday’s holiday. While the US 10-year yield has edged up 3.26%, European yields are mostly softer, with the peripheral premiums falling more than core rates. The US...

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US Holiday Facilitates Consolidative Tone

Overview: Most equity markets in the Asia Pacific region lost ground today. China’s Shenzhen, Hong Kong, and India were notable exceptions. The MSCI Asia Pacific Index is at its lowest level since June 2020. Europe’s Stoxx 600 is forging a base ahead of 4000 and is trading quietly with a small upside bias. The French stock market lagging after Macron lost his parliamentary majority, is raising questions about his reform agenda. US equity futures are firm, but the...

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