Pound Gains Bullish Traction ahead of Data Releases
British Chancellor Rishi Sunak expressed in an exclusive interview last week that post-Brexit Britain can look forward to a flourishing future as hopes and opportunities are rising again after a harsh start to the year. Following a robust employment report, April’s CPI inflation figures on Wednesday (06:00 GMT) and...
Sunset Market Commentary
Markets
Similar market dynamics are at play as yesterday in absence of key eco/event news. US housing starts unexpectedly fell by 9.5% m/m, but they did surge nearly 20% in March. Building permits (+0.3% m/m) printed near consensus. The data had no impact. European stocks managed a firm start but...
The Dollar Is Coming Under Further Pressure
Markets
Trading for the week took a slow, hesitant start, calming after last week’s hefty inflation-driven gyrations. Equities weren’t able to build on Friday’s rebound. Investors still pondered the meaning of recent sharp rise in inflation (expectations). Should it be considered a sign of a protracted rebound or will side-effects...
PoS Or Not, If Bitcoin Does Down, Others Should Follow
It's a slow start to the week and there is not much appetite across the equity markets. A part of this global lack of appetite is due to the inflation worries, but most of it, is due to the revival of virus worries as the Indian variant is now...
Sunset Market Commentary
Markets:
The inflation storm gradually cooled at the end of last week. Measures of US financial inflation expectations, including the breakeven inflation (10-y, 2.54%) and inflation swaps (10-y 2.65%) eased slightly off multi-year peak levels. EMU inflation swaps (10-y 1.67%) stay within reach of the 2018 top. Friday’s ‘ceasefire’ triggered...
The Dollar Struggles, But A Clear Resumption Of The Downtrend Doesn’t Materialize
Markets
Higher-than-expected US inflation readings reinforced the debate whether or not current price rises will be as temporary as most central bankers flagged of late. Financial inflation indicators including the 10-y US breakeven inflation (2.54%) jumped to multi-year peak levels after Wednesday's shocking US CPI release. Even so, the ‘inflation...
Stocks Stayed in Up Trend, Yields Range Bound, Dollar Lost Downside Momentum
Market debates heated up last week with the influx of some US economic data. On the other hand, the concerns on overheating inflation was legitimate given the much stronger than expected headline and core CPI reading from the US. On the other hand, poor retail sales, and prior week's...
Week Ahead – Inflation Scare Shakes Markets, European PMIs Next
It was a wild week in financial markets. Stocks got smoked while the dollar clawed back some ground as inflation finally showed its teeth, reigniting worries about higher interest rates being on the horizon. The upcoming week seems calmer. There are no central bank meetings and the minutes of...
Inflation Fear Prompted Selloff in Bonds and Stocks, Dollar Extending Recovery
Extremely higher volatility was seen in the markets overnight, with the steep decline in stocks and rally in yields. Bitcoin also had a free fall. Negative sentiments continue in Asia with major indexes trading in deep red. In the currency markets, Australia and New Zealand Dollars are under most...
Strong US inflation prompted deep selloff in DOW and strong rise in yield
US stocks tumbled sharply overnight after the big upside surprise in consumer inflation reading. Technically, while the pull back in stocks was deep, there is no threat to the up trend yet. However, the simultaneous strong rise is 10-year yield is worth a note. Correction in stocks could extend...
Gold to Sparkle for Now, But Mind the Fed Endgame
Gold prices have staged a mighty recovery in recent weeks. The stars seem to have aligned for the yellow metal, with the Fed set to keep its foot heavy on the liquidity gas even as inflation accelerates over the summer. That could be the sweet spot for bullion as...
CPI Even Higher than Expected. Is the Inflation Transitory?
The April CPI (YoY) data released earlier was expected to be high due to a “basing effect”, or the manner in which the number is calculated due to last springs high inflation. And indeed, it was, printing a 4.2% headline number (vs 3.6% expected) and 3.0% for the core...
Sunset Market Commentary
Markets
Consensus-crushing US CPI figures sent jolts through markets today. Headline inflation for April jumped 0.8% m/m to reach a whopping 4.2% y/y vs. 3.6% expected. That’s the fastest pace since September 2008. Core measures accelerated with 0.9% m/m (0.3% consensus) to a 2.5 decade (!) high of 3% y/y,...
Sunset Market Commentary
Markets
Asian and European markets today had to cope with growing worries on inflation that haunted US (equity) markets later in the session yesterday. European equities lose up to 2.5%. US indices are ceding another 1% (Dow) to 1.6% (Nasdaq) soon after the open. Investors apparently reached the point where...
Risk Sentiment Lifts The US Dollar
Inflation fears boost US dollar
The US dollar rose modestly overnight as inflation nerves sapped risk sentiment and firmed up US yields, notably in the 30-year tenor. In contrast to the panic seen in equities overnight and this morning in Asia, currency markets were orderly. The dollar index tested the...
Today’s Theme: Inflation
Markets again concerned about inflation
And just like that, we're back to financial markets schizophrenic flirtation with inflation. Not enough meds have been ingested clearly because all the talk was of ebbing inflation fears after Friday's mammoth Non-Farm Payrolls miss. Yet overnight, the inflation ghoul reappeared as US yields moved...
Risk Aversion Will Dominate, But Can It Overturn Renewed Weakness In US Treasuries?
Markets
Inflation was talk of town yesterday. What started with record-rallying metal prices turned to a preview for Wednesday’s US CPI release (headline 3.6% Y/Y; core 2.3% Y/Y) and ended with the NY Fed’s survey of consumer expectations. The latter showed that the median year-ahead consumer inflation expectations rose to...
Sunset Market Commentary
Markets
Sterling outperforms on FX markets today after Scottish parliamentary elections removed short term political risk. PM Sturgeon’s SNP came one seat short of an outright majority, denting her independence claim. However, together with pro-independent Greens, Holyrood will definitively give it its best shot. Sturgeon said she’ll seek a referendum...
Fed Monitor: “Still a Long Way to Go” – Fed is Currently “Employment-based”
Key takeaways
The Fed remains outcome-based (or, to be more precise, employment-based near-term) and with the weak jobs report on Friday, we do not expect the Fed to change policy signals near-term. The likelihood of a hawkish shift already in June has declined.
The Fed still thinks the labour...
It’s Hard To See What Could Help US Real Yields Catching Up With Inflation Expectations Again
Markets
A huge payrolls miss was Friday's defining moment for trading. The longed-for 1mn job growth in April turned out to be a 266k addition. Adding downward revisions in previous months resulted in a rarely seen 812k disappointment. US yields fell by up to 10 bps in a first reaction...
Dollar Tumbled Broadly, Stocks Hit Record, as Data Affirmed Fed’s Patient Approach
Dollar dropped broadly last week and ended sharply lower, as the huge non-farm payroll miss gave a strong node to Fed's patient approach. Progress could only be consider substantial as seen in realized economic data, rather than projected outlook. It's right that Fed is not even in a position...
Week Ahead – US and UK Data to Lead Quiet Week as Dollar Can’t Make Up its Mind
After plenty of excitement from central banks and top-tier economic releases in the past couple of weeks, things will take a backseat over the next seven days. The slower news pulse could give way to some sideways action in currency markets as the US dollar fights off selling pressure....
Sunset Market Commentary
Markets
We’ll jump straight to today’s main event: stellar US payrolls! Or at least that’s what markets were expecting. The actual figure of 266k job growth didn’t even come near to the one million consensus. To make it even worse, last month’s 916k was revised down to 770k. April job...
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
(European) equity markets this morning quite easily found their composure after yesterday’s sudden, tech-driven setback. Still, that move contained a warning that the debate on potential consequences of rising inflation might become a growing source of uncertainty/rising market volatility. European stocks currently are rebounding between 1.0% and 1.5%+. US...
Sunset Market Commentary
Markets
Investors struggled a bit for direction today ahead of important data tomorrow (US services ISM and ADP employment) and Friday (official payrolls report) and a slew of events (Norges Bank, Czech National bank, Bank of England and Scottish parliamentary elections) in between. For today’s data, we retain yet another...
Dollar Choppy, Stocks Resilient Despite ISM Miss
Dollar retreats after disappointing ISM report but bounces back
Sterling outperforms as speculation for BoE tapering grows
Gold capitalizes on subdued yields, RBA takes the sidelines
Markets in wait-and-see mode after ISM survey
The US dollar is still searching for direction. The reserve currency took a hit yesterday in the...
BoE Meeting and Scottish Parliamentary Elections: Would They Give New Impetus To GBP-Trading?
Markets
Let's pick up right where we left-off yesterday: the US manufacturing ISM disappointed, falling from 64.7 in March (highest since 1983) to 60.7 in April (vs 65 expected). Details showed a reversal of the March increase in production (62.5 from 68.1) with companies reporting supply chain struggles as a...
More Solid US Economic Data This Week
Market movers today
Few key market movers are due for release today, but another strong US ISM manufacturing reading in April could help markets into an upbeat start to the week.
Later this week the UK local elections, Bank of England and Norges Bank meetings and US jobs report...
Canadian Dollar Rally to Continue after a Strong Week, But Medium Term Strength Uncertain
Canadian Dollar ended last week as the strongest ones on a couple of factors. With some near term resistance taken out, such rally will likely continue for the near term. Swiss Franc ended as the second strongest. While Dollar was pressured for most of the week, it staged a...