Weekly Economic & Financial Commentary: Reopening Boom, while Supplies Last
U.S. Review: Reopening Boom, while Supplies Last
This week's economic data kicked off with a bang. The ISM Services Index jumped to 63.7, signaling the fastest pace of expansion in the index's 24-year history. The strong report came with some caveats, however, as the headline was propped up by...
Mexican Inflation Expected To Heat Up
Mexico's inflation data for March is expected to tick higher when the print is released tomorrow morning. The headline Inflation Rate is expected to increase from 0.63% to 0.83% MoM and the annualized rate is expected to increase from 3.76% in February to 4.67% in March. A few hours...
Weekly Economic & Financial Commentary: Softer Economic Data Do Not Signal a Change in Underlying Momentum
U.S. Review
Softer Economic Data Do Not Signal a Change in Underlying Momentum
This week's larger-than-expected declines in durable goods orders as well as new and existing home sales do not signal a shift in the economy's strong underlying momentum. Some payback in home sales was widely expected and monthly...
EUR/USD Ended Slightly Higher At 1.213
Markets
Yesterday was no different from any other day this week. Investors tapered bets on the reflation trade, in part following tame January CPI figures in the US on Wednesday which showed momentum in the real economy has yet to pick up. That said, yesterday's US jobless claims, both initial...
Weekly Economic & Financial Commentary: Loss of Momentum Sets Up Weak Q1
U.S. Review
Loss of Momentum Sets Up Weak Q1, but Recovery Pace Contingent on Vaccine Deployment
Economic data came in largely as expected this week and suggest continued economic recovery.
Real GDP growth advanced at a strong 4% annualized rate in the fourth quarter. The loss of momentum toward the...
Weekly Economic and Financial Commentary: Slow Start to 2021
U.S. Review
Slow Start to 2021
The manufacturing sector is showing a great deal of resilience, with the ISM Manufacturing survey exceeding expectations, at 60.7, and factory orders remaining strong.
The service sector is also showing a great deal of strength, although activity has clearly slowed in high-contact parts of...
Weekly Economic and Financial Commentary: Renewed Questions Surrounding Global Recovery
U.S. Review
GDP Bounces Partway Back in Q3
Real GDP jumped a record 33.1% during Q3, beating expectations. A 40.7% surge in consumer spending drove the gain. However, real GDP is still 3.5% below pre-pandemic levels.
Initial jobless claims dropped to 751k for the week ending October 24, the lowest...
Weekly Economic and Financial Commentary: All Eyes Are On Policymakers
U.S. Review
Slow Data Week Puts More Focus on Policy
Weekly first time unemployment claims highlighted an extraordinarily slow week for economic news. Jobless claims fell slightly but continuing claims fell by one million.
The ISM non-manufacturing survey handily beat expectation, rising 0.9 points to 57.8.
Job openings, as tallied...
Weekly Economic and Financial Commentary: Eurozone Recovery Threatened by Surging COVID Cases
U.S. Review
More Strong Housing Numbers
Existing home sales rose 2.4% to a 6.0-million unit annual pace. The surge in sales further depleted inventories and pushed prices sharply higher.
The IHS Markit Purchasing Managers' survey noted that manufacturing conditions improved in September.
New home sales soared 4.8% to a 1.011-million...
Weekly Economic and Financial Commentary: Q3 PCE Rebound in the Cards, Outlook More Uncertain
U.S. Review
Q3 PCE Rebound in the Cards, Outlook More Uncertain
After a revised look at GDP this week suggested the second quarter may not have been quite as bad as first estimated, attention shifts to the current quarter. Fresh data this week shed light on the outlook for consumer...
Week Ahead – Sino-US Tech War Heats Up
Country
US
Further evidence could show that coronavirus is getting under control in the US. New cases and hospitalizations have been declining, however testing slowed down drastically in the east coast due to Hurricane Isaias. On Wednesday, inflation data is expected to come back down to earth. Headline inflation should drop...
Weekly Economic and Financial Commentary: The Second Wave Appears to Have Crested
U.S. Review
While Risk Remains, The Worst Appears to Be Behind Us
The resurgence in COVID-19 in much of the Sun Belt appears to have topped out, although cases are rising faster in some smaller mid-Atlantic states and in parts of Europe, Asia and Australia.
Real GDP declined in line...
Weekly Economic and Financial Commentary: Rises COVID-19 Cases Offset Better Economic News
U.S. Review
Rising COVID-19 Cases Put a Damper on Re-openings
The rising number of COVID-19 infections gained momentum this week, with most of the rise occurring in the South and West. The rise in infections is larger than can be explained by increased testing alone and is slowing re-openings.
Home...
Banxico’s Turn!
USD/MXN may already be on its way to new highs!
The Central Bank or Mexico (Banxico) cut its benchmark interest rate by 50bps today from 6.5% to 6.0% in a surprise inter-meeting bank cut. This follows a previous emergency inter-meeting rate cut of 50bps on March 20th. In addition, the...
OPEC+ Deal on Output Cut Unlikely Helps Reduce Surplus. Downside Risk on Oil Price Remains
OPEC+ eventually agreed on a final deal to reduce oil production by -10M bpd. Despite the significant headline figure, the effective cut is much lower. Actual output cut, late start and compliance issues suggest that the deal should not offer much help to the demand/supply balance in the oil...
Mexican Standoff Ends With Underwhelming Agreement
The weekend’s major news was that after four days of haggling amongst the OPEC+ grouping and Mexico, and some arm twisting by the US President, an underwhelming 9.7-million-barrel production cut was agreed on Sunday. Elsewhere COVID-19 continues to rampage across the United States, although pleasingly, Spain and Italy’s infection...
Oil Left Joyless on Good Friday as Mexico Waves off OPEC+ Deal
Oil markets sceptical over OPEC+ production cuts
Demand destruction calls for immediate supply intervention
Asian stocks mixed amid holiday-hit volumes
Moderating Dollar sends Asian currencies, Gold higher
US earnings season, economic data to test bull market
Brent fell by 4.1 percent and is struggling to keep its head above...
Week Ahead – Fed and BOJ to Add More to the Punchbowl, Virus Disruption, and a Fourth Week of Heightened Volatility
A fourth week of heightened volatility will see financial markets continue to focus on the coronavirus spread across Europe and the US. The economic impact of the virus is deepening, and expectations are high for the week ahead to see another wave of massive monetary easing and for governments...
G7 Punt, Super Tuesday, OPEC Pressure, Gold Rally, LATAM Update
Best rally for the S&P in last 14 months was propelled on high hopes that financial markets were headed for another cycle of easing. Today, we did not get a full package announced, just another reiteration the world’s largest central banks will use all appropriate policy tools to mitigate...
Weekly Economic and Financial Commentary: A Tough Week
U.S. Review
A Tough Week
The COVID-19 coronavirus hammered financial markets this week and rapidly raised the perceived likelihood and magnitude of additional Fed accommodation.
The bond market now expects almost four Fed rate cuts by the end of the year, but one might rightly wonder how lower shortterm rates...
The Fall Of The Mexican Peso
Last week, we discussed how Yen and Emerging Markets (such as the Mexican Peso) were being sold and currencies such as the US Dollar and the Euro were bought. Our reasoning was that Japan’s largest pension fund (GPIF) was selling Yen for reallocation. At the time, stock markets were...
Asia Open – Are Markets Are Falling Out Of Love With Stocks? Oil Softens, Gold Hovers
Wall Street's wild ride saw stocks settle lower as uncertainty persists on the trajectory of the coronavirus and after the Fed signaled a bigger than expected withdrawal of liquidity with the repo operations. Asia is headed for a mixed open after markets digest the new way China is calculating...
Risk Appetite Grows ahead of Powell, Oil Bottom in Place, Gold Rally Pauses, EM in Focus
Global equities are higher across the board as investor optimism grows that Beijing is confident enough to allow its largest businesses to resume industrial production and on hopes that Fed Chair Powell’s testimony to Congress will signal that the coronavirus impact to the global economy could warrant further stimulus...
The Week Ahead – Virus Risk Uncertainty, Powell Testifies to Congress, RBNZ to Signal Patience, and Germany’s Recession Fears
Wall Street’s resilience will be tested again as some clarity emerges on whether the Chinese containment efforts were successful in limiting the spread of the virus globally. The death toll and number of infections continue to rise in China, but optimism is growing the lockdown efforts in Hubei have...
The Week Ahead – Virus Saga Continues, Iowa Caucuses are Here, RBA to Deliver Dovish Hold, and US NFP to See Slight Rebound
The primary driver for financial markets remains the coronavirus and its potential impact on the global economy. It is still too early to forecast the peak of the virus or even the impact it will have on the Chinese economy. The virus was spreading for a month before containment...
Week Ahead – Central Banks Back to the Fore
Coronavirus developments closely monitored
What a start to the year it’s been. There was so much that could have gone wrong in the opening weeks of 2020 and yet, it’s been the completely unexpected that’s rocked the markets.
This week it was the spread of Coronavirus that’s making investors nervous. We’re...
Weekly Economic and Financial Commentary: A (Mostly) Happy New Year
U.S. Review
Well, That De-Escalated Quickly
The week began amid rising tensions carrying over from the U.S. killing of Iranian General Qasem Soleimani last Friday. Iran responded with non-lethal airstrikes on U.S. facilities, but President Trump has said the U.S. has no plans to escalate further, and the Iranians appear...
Week Ahead – It’s a Trade Deal!
What a start to 2020!
It’s been a rather eventful first week of the year for financial markets and while next week may not be quite so action-packed, when it comes to the current climate, who knows what’s around the corner.
As far as the coming week goes, politics will continue...
Yen Trying to Rally as 10-Yr JGB Yield Turns Positive
The forex markets are relatively quiet today, with little reactions to the record run in US stock markets overnight. Yen is indeed to trying to rally risk appetite markets, drawing support from 10-year JGB yield which turns positive. Swiss Franc is generally firm as this week's rally is maintaining...
US House passed USMCA by 385-41 votes
In the US, House passed the legislation to implement the USMCA by 385-41 votes yesterday, with 38 Democrats, two Republicans and one independent lawmakers voted no. At this point, it's unsure when Senate will take it up. Senate Republican leader Mitch McConnell said before that a USMCA vote would...