Tag Archives: U.K.

Overview: Animal spirits are retreating today. Asia Pacific and European equities are lower, and US futures are narrowly mixed. US 2- and 10-year yields are edging higher, while European benchmark 10-year yields are mostly softer.  Italy and the UK are notable exceptions. Gilt yields are firming ahead of the budget statement. The dollar is trading higher against the G10 currencies. It still appears to be in a consolidative mode, but we continue to see risk of a more...

Overview: The situation in central Europe is still intense but it appears top US, European and Polish officials are more reluctant than some market participants to attribute the darkest of intentions and paint extreme narratives. The Polish zloty has recovered around 1.3% today and other central European currencies are also trading firmer to lead the emerging market currencies. The US dollar is broadly weaker against the G10 currencies. The large Asia Pacific bourses...

Overview: Recent developments have spurred a euphoria that is exciting the animal spirits. Greater confidence that US inflation has peaked, and new initiatives from China, and yesterday’s Biden-Xi meeting are all feeding this narrative. The dollar, which slumped last week, is sliding anew today. Strategically, we anticipated the turn, but tactically, we thought last week’s move had stretched the near-term technical condition.  The dollar is sharply lower (~-1%)...

Overview: China’s new initiatives to support the property sector helped lift the Hang Seng. And while the China’s CSI 300 edged higher both the Shanghai and Shenzhen composites fell. Most Asia Pacific markets fell, while Europe’s Stoxx 600 is posting a small gain. US futures are sporting modest losses. European benchmark 10-year yields are 3-5 bp lower, including UK Gilts ahead of Thursday’s budget that is expected to confirm new borrowing (Office for Budget...

Policymakers have often said that exchange rates should reflect fundamentals. What does that really mean? Can they do anything but that? It begs the question of which fundamental factors they should reflect. Therein lies the rub. We are still struck by the latest Bank for International Settlements figures. Their survey found that the average daily turnover in the foreign exchange market was $7.5 trillion a day. World trade last year was about $22.5 trillion. The...

Overview:  The softer than expected US inflation figures unleashed significant market adjustment that continue to ripple through the capital markets. The modification of some of China’s Covid stance may have also fanned some optimism, but we suggest that measures are modest tweaks, and the surge in infections will prevent the end of disruptive restrictions. Although we have been arguing that a significant dollar top was being forged, the move is stretched from a...

Overview: Anxiety is running high. Rather than ease its Covid restrictions, a surge in cases is seeing more areas in China come under restrictions. The US reports CPI and of the ten reports this year, seven of them have been stronger than expected. The turmoil in the crypto space has gotten noticed even by those not involved. Asia Pacific bourses fell, led by Hong Kong, and Europe’s Stoxx 600 is off for a second day. US equity futures are slightly firmer. US and...

There are three potential inflection points. The first is a pause from the Fed; if nothing else, Powell signaled it was too early to think about it. The second is for the Bank of Japan to change monetary policy. Governor Kuroda has signaled that it is not time. Conventional wisdom is there will not be a change until Kuroda's term ends next April. However, we note that the surveys suggest economists and BOJ inflation forecasts for next year have converged. The third...

Overview: Risk appetites have returned today. Bonds and stocks are advancing, while the dollar is better offered. Unsourced claims that Beijing has formed a committee to assess how to exit the zero-Covid policy sent Chinese shares sharply higher. An index of mainland companies list in Hong Kong jumped nearly 7% and closed up almost 5.5%. The Hang Seng surged 5.2%, while all the large markets in the region advanced. Europe’s Stoxx 600 recovered yesterday and is up...

Overview: The dollar has come back from the weekend bid. After the ECB and BOJ meetings last week, the focus has shifted back to the US where the FOMC meeting concludes in the middle of the week and the October employment report is out ahead of the weekend. Sterling and the yen are the weakest performers among the G10 currencies and are off 0.45%-0.50%. The Antipodeans are performing best and are straddling little changed levels. Emerging market currencies are lower,...