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Tag Archives: Japan

Week Ahead: More Evidence US Consumption and Output are Expanding, and RBNZ and Norges Bank to Hike

After two-quarters of contraction, many still do not accept that the US economy is in a recession. Federal Reserve officials have pushed against it, as has Treasury Secretary Yellen. The nearly 530k rise in July nonfarm rolls, more than twice the median forecast in Bloomberg's survey, and a new cyclical low in unemployment (3.5%) lent credibility to their arguments. If Q3 data point to a growing economy, additional support will likely be found.  While the interest...

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Dog Days

Overview: The dog days of August for the Northern Hemisphere are here and the capital markets are relatively subdued. Equities are firmer. The notable exceptions in Asia was China, Hong Kong, and Taiwan. The MSCI Asia Pacific Index has advanced for the last three weeks. Europe’s Stoxx 600 slipped almost 0.6% last week and has recouped most of it today. US futures are steady to firmer. The US 10-year yield is struggling to stay above 2.8%, while European benchmarks...

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Downside Risks to the US Employment Report?

Overview: The US dollar enjoys a firmer bias against the major currencies ahead of the July employment data. Emerging market currencies are mixed. Asian currencies are generally firm while central Europe is a bit softer. Some detect a relaxation in tensions around Taiwan, though China’s aerial harassment continues. Taiwanese shares jumped 2.25% to lead the region that saw China’s CSI 300 rally over 1%. Europe’s Stoxx 600 is giving back yesterday’s 0.2% gain, even...

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EMU GDP Surprises, while the Yen’s Short Squeeze Continues

Overview: The month-end and slew of data is making for a volatile foreign exchange session, while the rash of earnings has generally been seen as favorable though weakness was seen among the semiconductor chip fabricators. China, Hong Kong, and Japanese equities fell but the other large markets in the region rose. Europe’s Stoxx 600 is up around 0.8%. It is the eighth advance in the past 10 sessions. US futures are higher and the S&P 500’s advance of nearly 7.6%...

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Greenback Jumps Back

Overview: With the exception of Japan, Taiwan, and India, the large equity markets in the Asia Pacific region traded higher today. The Hang Seng led the move (1.65%) amid reports that Alibaba will seek its primary listing there. Europe’s Stoxx 600 is edging higher today. If it can hold on to the gains, it will be the fourth consecutive rise, the longest advance since May. US futures are slightly under water. Benchmark 10-year yields are mostly lower, with the US off...

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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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Dismal EMU Flash PMI on Heels of First ECB Rate Hike since 2011

Overview:  The euro is over a cent lower from yesterday’s peak, pressured by the drop in the flash PMI composite below 50 for the first time since early last year. More generally, the flash PMIs have shown the global economic momentum is waning, and the bond markets have responded accordingly. The US 10-year yield is flirting with 2.80%, its lowest level in more than two weeks. European yields are 15-20 bp lower and the spread between Italian and German bonds has...

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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 Dollar is on its Back Foot

Overview: The dollar’s downside correction continues today, helped by hawkish signals from the Reserve Bank of Australia and unnamed sources who have played up the chances of a 50 bp hike by the European Central Bank on Thursday. Asia Pacific equities were mixed, and mostly lower after the losses in the US yesterday. The prospect of a more aggressive ECB is weighing on European equities. The Stoxx 600 is slightly lower after rallying 2.7% in the past two sessions....

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Market Prices in More Aggressive Fed AND is more Confident of Rate Cuts by the End 2023

Overview: The higher-than-expected US CPI and the strong expectation of a 100 bp hike by the Fed in two weeks is propelling the dollar higher. It jumped to almost JPY139.40 and the euro is off more than cent from yesterday's high (though holding above parity). Even where there has been favorable economic news, like the strong jobs report in Australia, is failed to dent the greenback. Most of the large bourses in the Asia Pacific regions advanced. Hong Kong is a...

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