Tag Archives: Featured

The Canadian dollar's advance continues.  Neither the widening of interest rate differentials in the US favor nor a poor employment report has managed to buckle the Loonie. Oil and the general risk-on mood trump the other concerns.  In addition, investors are concluding that fiscal stimulus will reduce the possibility of additional monetary stimulus.  The implied yield on the June BA futures is now the highest since last June.  The Great Graphic, made on Bloomberg shows the greenback's...

The market reaction to Draghi's indication, once again, that interest rate policy has run its course, will be debated for some time.    Draghi delivered the goods that many investors said was lacking last December.  The ECB policy more than anyone expected.   All the boxes were checked.  Although the end date was not extended beyond March 2017, the four-year TLTROS will run into the new decade, and Draghi indicated that rates will remain low well beyond the end of the asset purchases....

The euro is paring the recovery that began in the middle of the ECB's press conference yesterday. The markets had reacted as one intuitively would expected to broad easing of interest rates and credit conditions.   The market reversed, and violently so, only after Draghi seemed to rule out further interest rate cuts.  Many investors took this to mean the ECB had gone all in and that monetary policy had reach the end.   We do not expect this interpretation to be sustained.   Even though...

Draghi delivered.  He managed to get approval for everything.  Rate cuts, acceleration of purchases, including corporate bonds to the purchase program and new long-term repos were announced.   The knee-jerk reaction was favorable.  The euro fell over 1% and peripheral European bonds rallied.   The deposit rate was cut 10 bp to minus 40 bp.  The asset purchases were increased by 20 bln euros a month to 80 bln.  Investment grade, non-financial corporate bonds would be included, easing...

Fasten your seat belts.  The ride is going to get bumpy.   Economists may differ on what the ECB will do.   Investors may differ on the market response.  This uncertainty ensures a strong market reaction. The euro is off about 0.25% after recovering in the North American session yesterday.  The euro has spent this week thus far mostly within last Friday's trading range.  It has finished the North American session in the last four sessions between $1.0999 and $1.1014 according to...

Investors are skeptical of Chinese economic data.  However, news yesterday that Chinese exports fell by a quarter in February was shocking. Many worry about the implications not just for China, but for world growth.  It comes as the IMF is signaling it will likely cut its 3.4% global growth forecast next month.  There are three separate forces that impacted Chinese trade figures.  First are price changes.  The dramatic drop in commodity prices, for example,  distorts the value of imports...

German Chancellor Merkel was right. As the Greek crisis was winding down last summer, she noted that the refugee problem would be even more difficult.  And indeed, it is. The refugee issue is challenging Merkel’s leadership in Europe.  While her trademark has been her sensitivity to swings in sentiment, she has seemed rather tone-deaf in dealing with the refugee crisis. Merkel still out of step with their European allies Her move this week suggests she is still out of step with many of...

The euro has peeled off a cent from yesterday's high near $1.1060 as some short-term players move to the sidelines ahead of the ECB meeting.  Recall that after peaking near $1.1375 on February 11 when the New Year's market angst peaked, the euro fell back to the lower end of its old range near $1.0825 in the middle of last week.  It then recovered by about 2.5 cents into yesterday's high, which saw it test the 20-day moving average for the first time since February 22. The...

Von Raoul Merz – Sie leben in der Stadt Zürich? Wussten Sie, dass Sie zehntausend Franken Schulden haben? Sie haben nichts angestellten, keine Sorge. Die Politik hat den Schlamassel für sie angerichtet. Das Finanzdepartement der Stadt Zürich präsentierte gestern Zahlen (Rechnung 2015 ). Heraussprang ein zufälliger Überschuss von 9.7 Millionen Franken. Okay, besser als ein Verlust sagen Sie. Damit haben Sie auch recht. Doch die entscheidende Zahl ist doch die Nettoverschuldung. Die...

A few weeks ago investors were bemoaning a new bear market for equities, and there was much ink spilled drawing parallels between now and 2008-2009.   Falling commodities, weakening growth, and prospects of Fed tightening saw the MSCI Emerging Market equity index fall 21.5% from early-November through the third week in January.  Since then it has rallied more than 16%, and both yesterday and earlier today traded above where it finished 2015.   The rebound in emerging market shares appears...