Tag Archives: Bank of Japan

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...

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...

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...

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...

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...

Overview: The markets' evolving expectations of a more aggressive monetary policy is not limited to the Federal Reserve, where the terminal rate is now straddling the 4% area, around 100 bp above late May levels. Consider that on May 31, the swaps market saw the key rate in the eurozone finishing the year at 60 bp. It has risen by more than 40 bp in the past four sessions. The UK expectedly reported the second consecutive monthly contraction in GDP, and still there...

Overview: The prospect of a more aggressive Federal Reserve policy has spurred a sharp sell-off in global equities and bonds and sent the dollar sharply higher. The large Asia Pacific bourses were off mostly 2%-4%. Europe’s Stoxx 600 is off 2.2%, its fifth consecutive losing session. US futures are off also. The NASDAQ was down 3.5% before the weekend and the S&P 500 fell 2.9%. The dollar rocks. The Scandis and Antipodean currencies are bearing the brunt and are...

Three G7 central banks meet in the coming days, and they dominate the macro stage. The Federal Reserve's meeting concludes on Wednesday, the Bank of England on Thursday, and the Bank of Japan on Friday. The market recognizes a strong consensus has emerged at the FOMC for 50 bp hikes in June, but the unexpectedly strong CPI report before the weekend saw the market price in about a 50% chance of a 75 bp hike in July. Some Fed officials have been understandably...

The fact that German retail sales crashed so much in April 2022 is significant for a couple reasons. First, it more than suggests something is wrong with Germany, and not just some run-of-the-mill hiccup. Second, because it was this April rather than last April or last summer, you can’t blame COVID this time. Something else is going on. . In America, the Fed Cult is out to take credit for this brewing downturn (Jay Powell seeking his place alongside Volcker, which...

This year was supposed to be about the easing of the pandemic and the normalization of policy. Instead, Russia's invasion of Ukraine threw a wrench in the macroeconomic forecasts as St. Peter’s victories broke the brackets of the NCAA basketball championship pools. The war has pushed up the price of energy, metals, and foodstuffs, which seemed to be advancing prior to the conflict.  High-frequency economic data are important because of the insight generated about...