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Sentiment and Positioning When we last discussed the gold sector correction (which had only just begun at the time), we mentioned we would update sentiment and positioning data on occasion. For a while, not much changed in these indicators, but as one would expect, last week’s sharp sell-off did in fact move the needle a bit. Gold – just as nice to look at as it always is, but slightly cheaper since last week. Photo...

Summary: The year-long euro uptrend comes in near $1.1035, just below the August lows. The technical are fragile, but the euro is below its lower Bollinger Band. The fundamental driver seems to be the backing up of US rates, and widening premium over Germany. This Great Graphic, composed on Bloomberg shows the euro against the dollar since the start of the year. It shows the trendline drawn off the...

Stock Markets Despite the weaker than expected US jobs report, the dollar remains firm and EM is ending the week on a soft note.  The main culprit was higher US rates, with the 2-year yield moving up to 0.85% and is the highest since early June.  Concerns about Brexit impact and as well the health of European banks remain ongoing and could weigh on risk sentiment this coming week.  Lastly, oil may come under more...

High frequency economic reports will be not be among the key drivers of the capital markets in the week ahead. The light schedule, consisting mostly of industrial production in Europe, inflation for Scandinavia, and US retail sales, will have minimal impact on rate expectations. A November rate Fed move was never very likely. The September employment report needed to be amazingly strong to boost the chances, and it was...

Summary: The US premium over Germany is at its widest since 2006. This is despite a small reduction in odds of a hike in December. There are many forces are work, but over time, the widening differential will likely give the dollar better traction. This Great Graphic from Bloomberg shows two time series. The white line is the spread between the German two-year interest rate and the US two-year yield. The...

Central banks are currently creating the mother of all bubbles. To my view it was caused by masses of cheap labor in China that entered the global economy in the early 1990s.This reduced inflation and interest rates, while Chinese productivity continously improved, in particular when rural workers came into the cities.The mother of all bubbles will pop at the latest, when Chinese wages approach Western levels....

Following the seemingly endless procession of short-squeeze-fueling trial balloons last week – from settlement rumors to German blue-chip bailouts to Qatari investors – Germany’s Bild newspaper confirms the rumors that sparked weakness on Friday: Deutsche bank CEO John Cryan has failed to reach an agreement with the US Justice Department. John Cryan - Click to enlarge Having soared over 25% off the briefly...

Swiss Franc EUR/CHF - Euro Swiss Franc, October 07 2016. - Click to enlarge FX Rates Sterling again steals the limelight. In early Asia, sterling inexplicably dropped nearly eight cents in minutes (to ~$1840), and on some platforms, may have traded below $1.1380. It almost immediately rebounded but has not resurfaced above $1.2480. Over the last couple of years,there have been a number of sudden dramatic moves...

SMI The Swiss Market Index is set to finish the week mainly unchanged, outperforming global stocks modestly while markets fluctuated on speculation that the US Fed will increase interest-rate later this year. SMI Index, October 7 - Click to enlarge Economic Data Global equity markets oscillated this week while the dollar strengthened, reflecting renewed investor concerns that the US Federal Reserve would raise...

The Swiss National Bank is offering a rare look into how it sets monetary policy. A video of SNB President Thomas Jordan and fellow members of the governing board shows them beginning their quarterly policy assessment discussing the state of the economy with about 30 people. According to the voiceover, the group comprises experts from different departments engaged in a question-and-answer session. [embedded content]...