Tag Archives: Germany

Overview: It seems that many market participants had the same thing in mind, cut dollar longs before the Jackson Hole gathering. The Antipodeans lead the majors move, encouraged perhaps by China’s new economic measures, with around a 1% gain. The euro and sterling are up about 0.35% and are the laggards. Emerging market currencies are higher as well, with the notable exception of India and Turkey, which are nursing small losses. Equities are having a good day. All...

 Overview:  The poor eurozone PMI underscores likely recession and weighs on the single currency, which was sold to a new 20-year low.  Rather than a "Turn Around Tuesday"  a broadly consolidative session is unfolding. Asian and European equities are weaker, while US futures are positive but little changed.  Benchmark 10-year bond yields are mostly firmer and the premium offered by Europe's periphery is edging higher.  The US 10-year is little changed near 3.02%....

Overview: The euro traded below parity for the second time this year and sterling extended last week’s 2.5% slide. While the dollar is higher against nearly all the emerging market currencies, it is more mixed against the majors. The European currencies have suffered the most, except the Norwegian krone. The dollar-bloc and yen are also slightly firmer. The week has begun off with a risk-off bias. Nearly all the large Asia Pacific equity markets were sold. Chinese...

Overview: The biggest development today in the capital markets is the jump in benchmark interest rates.  The US 10-year yield is up five basis points to 2.86%, which is about 10 bp above Monday’s low.  European yields are up 9-10 bp.  The 10-year German Bund yield was near 0.88% on Monday and is now near 1.07%.  Italy’s premium over German is near 2.18%, the most in nearly three weeks.  Although Asia Pacific equities rallied, led by Japan’s 1.2% gain, but did not...

Overview: The US dollar is consolidating yesterday’s losses but is still trading with a heavier bias against the major currencies and most emerging market currencies. The US 10-year yield is soft below 2.77%, while European yields are mostly 2-4 bp higher. The peripheral premium over the core is a little narrower today. Equity markets, following the US lead, are higher today. The Hang Seng and China’s CSI 300 rose by more than 2% today. Europe’s Stoxx 600 gained...

Overview: The US dollar is trading heavily against all the major currencies, led by the Norwegian krone and euro.  Emerging market currencies are also firmer.  However, risk-appetites seem subdued.  Even though most large bourses in Asia Pacific advanced but Japan and Hong Kong, European markets are nursing small losses and US futures are little changed.  Benchmark 10-year yields are firmer with European yields 3 bp firmer and Italy’s premium over Germany slightly...

Overview: The Federal Reserve delivered its second consecutive 75 bp rate hike, and Chair Powell left the door open for another large hike at the next meeting in September. Yet, the market took away a dovish message and the dollar suffered, rates slipped, and equities rallied. Central banks with currencies pegged to the dollar had to hike too. This includes Hong Kong, Saudi Arabia, Bahrain, and UAE, which matched the move in full. Kuwait and Qatar hiked by 25 bp and...

Overview: The dollar jumped yesterday making new highs against most of the major currencies, including the euro, sterling, the dollar-bloc and the Scandis. The yen and Swiss franc held in better, but the greenback still closed firmly against the yen despite a six-basis point decline in the 10-year yield. The Swiss franc rose to its highest level against the euro since the lifting of the cap in early 2015. After opening sharply lower, the S&P 500 and NASDAQ...

The most important thing to appreciate is that the market has moved to price not one but two cuts next year.  The first is priced into the September Fed funds futures and the second is in the Dec Fed funds futures.  This I in response to weaker than expected data that have elevated recession fears.  The Atlanta Fed GDPNow puts Q2 growth at -2.1%.  Banks have revised down their forecasts, but none of the 59 economists in the Bloomberg survey have forecast a negative...

Consumer confidence in Germany never really picked up all that much last year. Conflating CPIs with economic condition, this divergence proved too big of a mystery. When the German GfK, for example, perked up only a tiny bit around September and October 2021, the color of consumer prices clouded judgement and interpretation of what had always been a damning situation. From GfK back then: The growing consumer optimism signals that consumers here consider the German...