Tag Archive: Mexico
Consolidative Session Marked by Weak Chinese Imports and White House Debt Ceiling Talks
Overview: The market sentiment remains fragile.
Equities are mostly lower. Japan was a notable exception, and concerns about
China's economy after a sharp decline in imports took mainland and Hong Kong
listed companies sharply lower. Europe's Stoxx 600 is giving back yesterday's
0.35% gain plus more. Bank shares are off 0.65% after rallying 4.20% over the
past two sessions. US equity futures are heavier. Benchmark 10-year yields are
mostly a couple...
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The Greenback Continues to Struggle
Overview: There is a nervousness that hangs over the capital markets.
Although US banks shares recovered at the end of last week, many continue to
see the sector’s challenges as the harbinger of a dramatic reversal in the Fed’s
stance. America’s debt ceiling looms large and could be a few weeks away. China
led Asia Pacific bourses higher, and, ironically, its bank shares extended their
rally. Japan, returning from last week’s holiday was notable...
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RBA Surprises with a Quarter-Point Hike
Overview: A combination of a surprisingly strong
prices paid component to the US manufacturing PMI, corporate supply, and US
debt woes spurred an almost 15 bp spike in the US 10-year yield and 13 bp jump
in the two-year yield. The rise in US rates appeared to lend the dollar support.
The greenback's gains have been extended today, but a surprise hike by the
Reserve Bank of Australia is seeing the Australian dollar (and New Zealand
dollar) traded...
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Yen Slumps on Cautious BOJ
Overview: The market took a dovish message away from
the Bank of Japan and sent the dollar above JPY136, its best level since March
10 and spurred a sharp rally in JGBs. Japanese equities led the rally among the
Asia Pacific markets. Europe has not been able to follow suit. It disappointed
with Q1 GDP (0.1% rather than 0.2%). The Stoxx 600 is of about 0.3%, leaving it
off about 1.3% this week, its first weekly loss since the middle of March. US...
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Risk-Off Mood Dominates
Overview: Perhaps it was the extent of First Republic
Bank's loss of deposits that were reported with earnings yesterday, but risk
appetites dried up today. Asia Pacific equities were trounced outside Japan
today. Hong Kong and mainland shares that trade there set the tone today
falling 1.7%-1.9%. China's CSI 300 fell for the fifth consecutive session. Taiwan
and South Korean markets fell more 1.4%-1.6%. Europe's Stoxx 600 is off almost
0.5%,...
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Equities Retreat while the Dollar is Confined to Narrow Ranges
Overview: Equities are mostly lower, while bonds have risen. The
dollar is trading in narrow ranges and mixed against the G10 currencies and
emerging markets. Most Asian bourses were lower. The Nikkei (though not the
Topix) and Hong Kong were the chief exceptions. Europe's Stoxx 600 is off for
the second consecutive day, in what looks like the first back-to-back loss
since early this month. US equity futures are lower, with the NASDAQ, which
eked...
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Hawkish ECB Comments Boost Risk of a 50 bp Hike Next Month
Overview: The 0.5% decline in US March producer
prices pushed on the door opened by the softer-than-expected CPI on Wednesday.
The Fed funds futures market sees the year end rate to a 4.33%, while still
pricing in a nearly 70% chance of a hike on May 3 to 5.25%. The dollar tumbled
to new lows for the year against the euro, sterling, and Swiss franc. The
Dollar Index made a new low for the year today, a few hundredths of an index
point below the low...
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Greenback Pares Yesterday’s Gains
Overview: As the long-holiday ends, risk appetites
have returned. Equities and yields are mostly higher. The dollar is seeing
yesterday's gains pared. Yesterday's setback in the yen helped lift Japanese
stocks, with the Nikkei advancing 1%. Several other markets in the region also
gained more than 1%, including Australia and South Korea. China's CSI was an
exception. It slipped fractionally. Europe's Stoxx 600 is up nearly 0.6%
through the European...
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Fragile Calm Casts a Pall over the Capital Markets
Overview: There is a fragile calm in the capital
markets today ahead of the long holiday weekend for many. The poor US economic
data yesterday and third consecutive decline in the KBW bank index weighed on
risk sentiment. Most of the large bourses in the Asia Pacific region fell, with
Hong Kong and India notable exceptions. In Japan, the Topix bank index fell
1.1% after a 1.9% decline yesterday and is now lower on the week. Europe's
Stoxx 600 is...
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Pressure Returns to Bank Shares and seems to Help Propel Gold Higher
Overview: There are three themes today. First, the
sharp decline in US rates seen yesterday (-14 bp on the two-year yield) on the
back disappointing economic data seemed a bit exaggerated and the two-year
yield has bounced back to almost 3.90% from around 3.81%. This appears to be
helping the dollar consolidate today. Second, bank shares are coming under
renewed pressure. The US KBW bank index fell almost 2% yesterday after a 0.5%
decline on...
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RBA Holds Fire, Sterling Reaches Best Level since last June, and the Dollar Struggles to Find Much Traction
Overview: The jump in oil prices is the newest shock and the May
WTI contract is holding above $80 a barrel as it consolidates yesterday's
surge. A week ago, it settled near $73.20. Australian and New Zealand bond
yields moved lower, partly in catch-up and partly after the RBA stood pat. South
Korean bonds also rallied on the back of softer inflation (4.2% vs. 4.8%). But
European and US benchmark yields is 2-4 bp higher. The large equity markets...
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March: Going Out like A Lamb after Wrestling with a Lion
Overview: The banking stress that roiled the markets
this month has eased. However, the emergency lending by the Federal Reserve,
vias the discount window and new Bank Term Funding Program hardly slowed in the
past week ($152.6 bln vs. $163.9 bln). Money markets took in more funds. Almost
$305 bln has flowed to them over the past three weeks. The US KBW bank index is
up 3.75% this week coming into day (after pulling back 1.2% yesterday). Europe's...
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Dollar Soft but Stretched
Overview: While bank stress seems to continue
to ease, the dollar languishes against most of the major currencies. The
Japanese yen is the notable exception. It is off about 1.5% this week. The
Dollar Index has given back the gains scored at the end of last week but
remains inside the range set last Thursday and Friday (~101.90-102.35). Perhaps
the participants are waiting for Friday. In addition to month-, quarter, and
fiscal-year ends, it is...
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Calmer Markets to Start the New Week
Overview: There did not appear to be any negative
surprises over the weekend, and this is helping calm investors' nerves at the
start of the new week. Deutsche Bank shares have recovered most of the
pre-weekend loss in the German market, and Stoxx bank index is posting a gain
for the first time in four sessions. The AT1 ETF is slightly softer. In Japan,
the Topix bank index slipped around 0.5%, its fourth decline in the past five
sessions. Asia...
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Banking Stress Eases
Overview: The banking crisis is ebbing. The Bank of
England and European Central Bank assured investors that the AT1 bonds are
senior to equity claims, and Switzerland is a unique case. Bank share indices
in the Europe and the US rose yesterday, even though the shares of First
Republic Bank fell by 47% yesterday. The $123-stock at the end of last month
reached almost $11 yesterday. It is trading around $14.75 pre-market. Global equities are...
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Yen Jumps Despite Poor GDP Ahead of Tomorrow’s BOJ Outcome
Overview: Seeing the drama he inspired on Tuesday,
the Fed chair tried soft-pedaling the idea that he was signaling a 50 bp hike
in March. The market did not buy it. And the odds, discounted by the Fed funds
futures rose a little above 70% from about 62% at Tuesday's close. The two-year
note yield solidified its foothold above the 5% mark. With the Bank of Canada
confirming its pause, the Reserve Bank of Australia does not seem that far
behind, and...
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Doubt Chinese Data, but Its Stronger-than-Expected PMI Lifts Risk Assets
Overview: Many investors may be skeptical of the
accuracy of Chinese data, but its stronger than expected February PMI animated
the animal spirits and bolstered risk-taking appetites. Asia Pacific equities
jumped, led by the 4.2% rally in Hong Kong and a 5% surge in the index that
tracks mainland shares. Among the long bourses Australia and Singapore slipped,
and South Korean markets were closed for a national holiday. Europe's Stoxx 600
is posting...
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Markets Catch Collective Breath
Overview: After last week's flurry of activity that saw the US
dollar extend its recovery, it has begun off the new week largely consolidating
in relatively narrow ranges. The Australian and New Zealand dollar's remains
softer, and the Swiss franc is virtually flat, but the other G10 currencies,
led by sterling are posting small gains. A break-through on the Northern
Ireland protocol, which has been rumored for a more than a week may be
announced...
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Ueda Day
Overview: Rising rates and falling stocks provided the
backdrop for the foreign exchange market this week. The dollar appreciated
against all the G10 currencies but the Swedish krona, which is still correcting
higher after the hawkish pivot by the central bank. The market looks for a
later and higher peak in the Fed funds rate. This coupled with the risk-off
sentiment helped the dollar extend its recovery after falling since last...
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Fed Tightening Seen Extending into Q3
Overview: The prospect that the Federal Reserve tightening
cycle continues into early Q3 is underpinning the greenback today against
most of the G10 currencies. The dollar bloc is the notable exception, and they
are posting minor gains, perhaps encouraged by the firmer equity markets. The
minutes of this month’s FOMC meeting appear to show wide support for quarter
point hikes going forward and there did not seem to be much discussion of the...
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