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Week Ahead – Dollar Declines after Massive Payrolls Miss; Focus Shifts to Inflation

Wall Street went on a wild ride after a huge nonfarm payroll report miss reaffirms the Fed’s stance to do nothing. A massive slowdown in hiring was not expected and the knee-jerk reaction across the bond market might have paved the way for further dollar weakness. The US economic...

Sunset Market Commentary

Markets The Bank of England published its much-anticipated May inflation report today. The document didn’t alter the MPC’s policy stance. All parameters remain unchanged. The policy rate stands at 0.1% with targets of asset purchase programmes being £875bn and £20bn respectively for UK Gilts and for corporate bonds. Chief economist...

Sunset Market Commentary

Markets Today’s most eye-popping development came at the start of EU dealings on EU rate markets. Curves rapidly started bear steepening, lifting long term yields to fresh recovery highs. The German 30-yr yield even tested the 2020 high (0.38%) for a first time. In absence of eco data – apart...

Week Ahead – BoE and RBA Rate Decisions in Focus; US April NFP Report Could Show Over a Million Jobs Created

Everyone on Wall Street is trying to figure out if the peak in Treasury yields will stick for a while now that the US is approaching peak growth. The best expansion since World War 2 is being accompanied with a Fed that remains committed to supporting the economy until...

Sunset Market Commentary

Markets The EU 10y swap rate pierced through 0.11% resistance. For good this time it seems, after the Fed-triggered swoon in US yields prevented a break yesterday. This move to new recovery highs paves the way to more important resistance in the 0.21%/0.24% resistance zone where a trio technical levels...

Week Ahead – Fed to Stay the Course, Huge Earnings Week for Big-Tech, and OPEC+ Meets

Wall Street could see more volatility during a very busy trading week that is filled with a wrath of central bank decisions, surging international COVID-19 cases, solid economic data, effects of stimulus working its way through the economy, and pent-up consumer demand. Financial markets are edge, especially considering how...

Sunset Market Commentary

Markets After a week with few EMU and US data, EMU PMI’s provided a reality check on how the economy weathers the new corona wave, annex new containment measures. The PMI’s provided comfort. The EMU composite PMI even improved further from 53.2 to 53.7. Growth in the manufacturing sector (63.3)...

Week Ahead: Bank of Canada to Reduce Purchases; Global Economic Recovery to Pickup

The global economic recovery is gaining momentum as the world’s two largest economies continue to deliver robust economic readings. China’s economy grew 18.3% in the first quarter, a record rate that sets the example of what we can expect as the rest of the world recovers from COVID-19. The...

Sunset Market Commentary

Markets The better the US eco data get, the more adverse the market reaction becomes. It fits with the view that markets turned into reflation hibernation at the start of Q2 2021. Markets finally aligned with the Fed’s message not to frontrun on policy normalization any time soon. The US...

Sunset Market Commentary

Markets Markets started the week on a cautious footing after Friday’s ‘reflationary up-tick’. With few eco data on the agenda, investors are awaiting key US inflation (tomorrow) and other activity data (including US retail sales and confidence data) scheduled for release later this week. For interest rate markets, the mid-month...

Week Ahead: Fed’s Inflation Calm About to Get Tested

The Fed has clearly signaled they are not worried about inflation and that should worry financial markets. The Fed has repeated that inflation will be transitory, but financial markets have never seen this record amount of stimulus get pumped into the economy. The US economy is about to run...

Week Ahead: US Jobs Hiring Spree Suggests Reflation Trade is Back

Country US The US economy is about to run hot as a hiring spree has officially started.  The dollar may have got its groove back as Treasury yields are rising again.  It will take several months of massive job gains to alter the Fed’s stance, so investors can feel confident that...

Sunset Market Commentary

Markets The OPEC+ meeting features high on today’s agenda. Saudi Energy Minister Bin Salman said in the run-up to the meeting that OPEC’s cautious approach in March has been proven right. The cartel kept mutual and individual (Saudi Arabia) output curbs in place because of the uncertain path of the...

Week Ahead: Has the US Economic Boom Been Mostly Priced in?

Vaccine rollout success in the US has Wall Street quickly pricing in rapid growth during the recovery stage. The trend in daily new cases is rising in the US but the successful vaccine rollout will make any sharp accelerations short-lived. The Biden administration is vaccinating 1.2% of all adults...

TRYing Times & EM FX Volatility

Turkish Lira fireworks are back with a bang in the EM scene. TRY plunged at the start of Monday trading after Erdogan fired central bank governor Naci Agbal following a rate hike. EM currencies were pressured across the board, prompting USD higher and metals lower in early Asi trade....

Currency Pair of the Week: USD/TRY

For all that has been said and done over the last few weeks, the US Dollar index (DXY) has been relatively rangebound since the beginning of March.  Despite the extremely dovish FOMC meeting, rising interest rates, and increasing inflation expectations, the DXY has remained between 91.00 and 92.00 since...

Lira Crashes After Erdogan Sacks CB Chief, Yen Climbs, Stocks Struggle

Turkish lira plummets by 13% after Turkey's president fires hawkish central bank head Surprise move causes jitters in financial markets, boosts safe havens like yen and dollar Aussie leads the losers, euro and pound slip too amid growing UK-EU vaccine row Lira plunges to 4-month low amid fresh crisis Turkish...

The US Dollar Rises In Asia

US dollar higher, Turkish lire plummets Despite the noise in equity and bond markets, currency markets seem content to consolidate the US dollar gains spurred by the spike in US yields last week. The dollar index finished almost unchanged at 91.91 on Friday, rising to 91.97 this morning. Amongst the majors,...

The Uncomfortable Ergonomics Of Erdonomics

Turkish lire takes a tumble The Turkish lire suffered a massive fall in the twilight zone of early Monday morning after President Erdogan removed central bank head Naci Agbal from his post on Saturday. The lire (TRL) fell approximately 17.0% to 8.4900 this morning before USD/TRL stabilised around 8.1000, a...

Turkish Lira Plunge Felt In Japan

Turkey has returned to financial market headlines following President Erdogan’s decision to fire the country’s hawkish central bank head on Saturday. The Turkish Lira tumbled 14% against the dollar as trading kicked off in Asia to become one of the worst performing emerging market currencies against the greenback this...

Weekly Economic & Financial Commentary: Still on Track for a Robust Recovery Even After Soft Data This Week

U.S. Review Still on Track for a Robust Recovery Even After Soft Data This Week The worse-than-expected outcomes for February retail sales, industrial production and housing starts were in part due to the severe winter weather that hit much of the country last month. However, other factors contributed to each...

Sunset Market Commentary

Markets Yesterday’s remarkable ‘entente’ between markets and the Fed was short-lived. Markets were happy to embrace the Fed’s guidance to keep policy accommodative until hard data confirm the bank is reaching its targets. Second thoughts kicked in this morning. US yields easily reversed yesterday’s decline, with the long end setting...

Week Ahead: Rising Treasury Yields Will Make this an Interesting FOMC Decision

The bond market seems determined to make this an interesting FOMC policy decision. Treasury yields have been surging after the Biden administration passed the $1.9 trillion COVID relief bill and set a May 1st goal of getting vaccines to all adults. The Fed welcomes a steeper yield curve, but...

Week Ahead: Dollar Rally Continues as US Yields Rise

The taperless tantrum could continue across financial markets now that it seems clear Fed Chair Powell won’t react until he sees disorderly market conditions or if financial conditions tighten further. Positive economic, such as this past employment report might continue to fuel optimism about the economic outlook and that...

Week Ahead – Rising Yields Spook Markets

Powell fails to ease concerns Everyone is watching the bond markets at the moment, as yields accelerate higher and investors become increasingly anxious. That is dominating the headlines and it’s unlikely to change next week, with the jobs report on Friday now even more significant. Country US It seems Wall Street is much...

Week Ahead – Powell to the Rescue

Rising yields spook investors Jerome Powell’s appearances in Congress next week may come at the perfect time. Rising yields have made investors nervous and the Fed Chair may be the person to put their minds at ease. Meanwhile, Boris Johnson will lay out plans for the easing of the lockdown...

Sunset Market Commentary

Markets Markets show a diffuse picture today. Equities are off their recente peaks, but the correction remains modest given the sharp upswing since early February. European indices shed 0.25%-0.50%; their US counterparts 0.75% (S&P and Dow) to 1.15% (Nasdaq). For now, it still looks like a correction rather than a...

Week Ahead – Cause for Optimism

Minutes and PMIs eyed Investors are growing increasingly hopeful about the economic outlook and next week’s PMIs will tell us whether businesses share their optimism. Central bank minutes will also provide more insight into whether policy makers are encouraged and what it means for monetary policy. Country US Optimism grows for the US...

Week Ahead – Stimulus Battle Continues

A lively start to the year It’s been an surprisingly lively start to the year, with recent weeks being dominated by retail traders taking on hedge funds and showcasing the power of social media. While that looks to have gone quiet, a repeat performance may not be far away. With...

Sunset Market Commentary

Markets Today’s economic calendar focused on euro zone CPI for January, which rebounded for the first time in six months into positive territory (0.9% y/y, up from -0.3% in December). Core inflation also jumped from 0.2% to 1.4% y/y, the highest level in more than five years. However, this acceleration...