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Marc Chandler

Marc Chandler

He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.

Articles by Marc Chandler

Investors Scared Before Halloween

24 hours ago

Overview:   Investors punished US tech giants for not delivering perfection as prices apparently had discounted, and the subsequent sell-off coupled with month-end dynamics has rocked global equities.  Asia Pacific bourses were a sea of red, led by a 2.5% decline in the tech-heavy South Korean Kospi, but most major markets were off more than 1%.  European equities are faring better, and are trying to snap a four-day decline.  US shares are lower, and the S&P 500 is about 1% lower in electronic trade.  Debt markets are not drawing much of a safe haven bid today.  Benchmark 10-year yields are a little higher, and the US Treasury is near 0.81%.  Given the rout in the equity markets, the currency market is also subdued.  The dollar is mostly firmer but in late European morning turnover but

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Markets Continue to Struggle

2 days ago

Overview:   The spreading virus that is shutting down large parts of Europe, while the US is reluctant to return to lockdowns and refuses to have a nationwide requirement for masks in public hit risk assets yesterday.  The S&P posted its largest decline in four months yesterday (~3.5%), and the selling carried into the Asia Pacific region.  Most bourses fell, led by the 1.6% slide in Australia and Taiwan’s 1% fall.  Chinese markets were more resilient and posted modest gains.  Around 970 Chinese companies reported earnings today, and most appear to be reporting sequential improvement.   The Dow Jones Stoxx 600 dropped almost 3% yesterday, but today is trying to snap a three-day 5.7% slide that brought it to five-month lows.  It rose by about 0.5% in early dealing. The S&P 500 gapped

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Introducing the Bannockburn World Currency Index

3 days ago

The Dollar Index is a popular way to think about and trade "the dollar."  However, it has become less relevant as a reflection of the dollar’s performance or representative of trade, capital flows, market capitalization.  Economists often use a trade-weighted basket, and the Federal Reserve’s real broad trade-weighted index is an input in official and private-sector forecasts.  As an alternative, we present Bannockburn’s World Currency Index (BWCI).  It is weighted by the World Bank’s GDP estimate and includes the top dozen countries, with one notable exception, the eurozone counts as one entity.  Half of the members of the BWCI are from developing countries, and the other half are from high-income countries.  Unlike other measures,  it is truly a world currency basket and includes the US

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Animal Spirits Called in Sick

3 days ago

Overview:  Sickened by the surging virus, animal spirits are bed-ridden today. Several European countries are experiencing the most fatalities and illnesses in several months, and policymakers are responded with national restrictions. In 32 US states, hospitalizations have surged by over 10% in the past week.  In the Asia Pacific region, China, South Korea, and the Australian market were the islands green on red equity screens that reflect the decline in nearly every place else.  In Europe, the Dow Jones Stoxx 600 is off around 2.5% in late morning turnover.  The tenth decline in 12 sessions has brought the benchmark about 8% lower to reach levels not seen in five months.  US shares are heavier, and the S&P 500 is trading electronically about 1.5% lower.  US 10-year Treasuries and German

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Markets Take Collective Breath and Beijing Tweaks Fixing Mechanism

4 days ago

Overview:  The surging pandemic sapped the risk-taking appetites as some investors hunker down for what could be a volatile period ahead.  The S&P 500 lost nearly 3% at its lows before rebounding 1% in late dealings.   However, the US’s fiscal stimulus remains highly likely even if not immediate, and more intensive trade talks between the UK and EU have already begun. The spread of the virus also means policymakers must be vigilant in their response, and many countries will need to extend their efforts.  Equities in the Asia Pacific and Europe are mostly lower.  Chinese and Indian markets were more resilient, while the Antipodeans experienced a 1.7% slide.  Europe’s Dow Jones Stoxx 600 is off for the ninth session in the past 11 for around a 5% pullback.  The S&P is seen little changed.

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Troubling Start of the Important Week

5 days ago

Overview: The surging virus ravaging large parts of Europe and the United States is fanning concerns over the economic implications as new social restrictions and curfews are announced in several countries.  US additional fiscal support remains elusive as aid for states and local governments remains a bone of contention.  Equities are under pressure. Most bourses in the Asia Pacific region fell, and a good part of last week’s gains have been given back.  In Europe, the Dow Jones Stoxx 600 is off a little over 1% in late morning turnover after falling for the past two weeks.  US shares are lower, too, and the S&P is around 0.7% lower.    Declining equities and growth concerns are pushing yields lower.  The US 10-year benchmark yield is off about three basis points to 0.81%. European

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The Greenback does Not Look Ready to Break Down Quite Yet

6 days ago

The US dollar had a tough week, falling against all the major and most emerging markets currencies.  The weakness came in the face of higher US yields and a wider premium over most other high-income countries. The US 10-year yield almost 10 bp, the most in a couple of months to settle around 0.84%, after reaching the highest level since early June.   It did not seem so much like a risk-on/off story.  Equities slipped lower, and the S&P 500 snapped a three-week advance.  Europe’s Dow Jones Stoxx 600 fell almost 1% last week and that was after a nearly 1% advance before the weekend to snap a four-day fall.  The UK-EU resumed trade talks, and the House Democrats saw progress in talks with the White House, but no breakthroughs were announced.  While somewhat more presidential, the last debate

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Big Week Ahead

7 days ago

A two-week period is about to begin that could usher in a new phase for the global capital markets.  Most of the major central banks hold policy meetings, and the US and Europe report the preliminary estimates of Q3 GDP.  The US holds its national elections. A clearer sense of UK-EU trade talks ahead of the mid-November summit is likely.  China holds a plenary session for the central committee of the Communist Party to hammer out the new five-year plan (2021-2025).  In terms of high-frequency data, the eurozone estimates October CPI amid deflationary worries. The US will report its October employment data a couple of days after the election.  There is some concern that seasonal factors and the winding of census workers could see a weak report, and some warn of the risk of an outright

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Disappointing PMIs may Sharpen ECB’s Dovishness but the Euro Remains Firm

8 days ago

Overview:  The US dollar is finishing the week on a soft note, falling against all the major currencies.  On the week, it is off by at least one percent against most of them, with the Australian and Canadian dollars and Japanese yen, laggards, rising 0.5%-0.75%.  Emerging market currencies are largely participating, as well.  The JP Morgan Emerging Market Currency Index up almost 1% this week.  Turkey, where the central bank disappointed participants by not hiking the one-week repo rate yesterday but hiked the arguably more relevant late loan window by150 bp to14.75%, was not enough to prevent the currency from falling to record lows, leaving the dollar knocking on TRY8.0. The large equity markets were mixed in the Asia Pacific region.  The big winner this week was Hong Kong, where the

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Greenback Stabilizes

9 days ago

Overview:  Two sets of talks have riveted attention, and both appeared to have made progress yesterday. After some words, the EC, recognizing the importance of UK sovereignty, UK Prime Minister Johnson signaled a resumption of trade talks. In the US, Pelosi and Mnuchin appear to be on the verge of a deal. The dollar is consolidating yesterday’s losses. Equities are lower, and benchmark yields are little changed. Sterling, which jumped 1.8%, the most in seven months, stalled near $1.3180, is softer today, as are most of the majors, but the New Zealand and Canadian dollars are slightly firmer. Most bourses in the Asia Pacific region fell, though Hong Kong and Taiwan eked out small gains. Europe’s Dow Jones Stoxx 600 is off for the fourth consecutive day and set new lows for the month.

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Dollar Slumps as Yields Rise

10 days ago

Overview:  The dollar is falling against most of the world’s currencies today, even as long-term yields rise to the most in four months and drags global yields higher.  The US 10-year yield is pushing above 0.80%, and the 30-year is above 1.60%.  Many are linking the backup in yields to prospects of additional fiscal support.  European benchmark 10-year yields are 2-4 bp higher.  China’s bond yield slipped marginally.  Sterling and the Norwegian krone are leading the majors higher.  The greenback has slipped below JPY105, and the euro reached $1.1870, its highest level in a month.  Most emerging market currencies are higher, though the Hungarian forint and Polish zloty are struggling.  The Chinese yuan extended its gains and is now at the best level since July 2018. Equity markets are

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Narrowly Mixed Markets as Clearer Direction Sought

11 days ago

Overview:  The capital markets lack a clear direction today.  This is reflected in narrowly mixed equities, bonds, and currencies.  The spreading contagion is giving rise to new economic concerns, among other things, and the UK-EU talks are struggling to resume, while Pelosi-Mnuchin talks in the US continue to drag.  In the Asia Pacific region, Japan, Taiwan, and Australian bourses led declines, while China, Honk Kong, South Korea, and India advanced.  Europe’s Dow Jones Stoxx 600 is straddling little changed levels, while US shares recoup part of the losses suffered late yesterday.  US and European yields have firmed, and the core-periphery spreads are widening.  However, the widening is not weighing on the euro, as it often does, and the single currency is above $1.18 for the first time

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Sterling Sparkles in Dollar Setback

12 days ago

Overview:  Investors have not let the surge of the virus or uncertainty over the UK-EU talks or US fiscal stimulus to stand in their way.  Sterling is leading the major currencies higher, returning to the $1.30 area, while global equities are trading higher.  In the Asia Pacific region, Chinese shares, and Thailand, where large-scale protests continue, bucked the move higher, led by more than 1% gain in Japan and Taiwan.  Europe’s Dow Jones Stoxx 600 is pushing higher (~0.5%) for the second consecutive session while the S&P 500 is trading near the pre-weekend high.  Bond yields are mostly higher, with the US benchmark up two basis points to 0.76%.  European peripheral yields are firmer than the core.  Chinese bonds are an exception, and yields slipped a couple of basis points to about

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Sterling and Yuan Resilience, While Rate Differentials Aid Dollar?

13 days ago

The US dollar rose against nearly all the major currencies last week.  The yen was the sole exception.  Risk appetites were shaken by repeated cycles of hope and disappointment over the outlook for additional fiscal support in the US and Europe’s brinkmanship in the UK-EU trade talks.  For the most part, the greenback did not break above key chart points, though the euro flirted with support a little below $1.17 and made a marginal new low for the month. Of the majors, the Australian dollar suffered more than a 2% decline following the strongest signals to date that that Reserve Bank of Australia will do more to support the economy. However, it is still a question of precisely what it will do. The prospect of the RBA buying longer-term maturities helped push Australia’s 10-year bond yield

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Macro Drivers

14 days ago

Macro memes are likely to eclipse the high-frequency economic data in the coming days.  The preliminary PMIs are among the first survey data for the new month, and October’s are on tap next week.  The key reason that there may be downside risks in the US and Europe, especially in services, is the virus’s resurgence and new restrictions.  A third of US states are reporting a record number of cases, and in Europe, from Portugal to Poland, are getting hit harder than many did earlier this year. Optimism about a near-term vaccine was blunted last week as two pharmaceutical companies halting testing due to safety concerns.  The virus, and mounting evidence of second-time affliction, which also makes herd-immunity even in relatively small communities, like neighborhoods, more elusive, will

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Deja Vu All Over Again

15 days ago

Overview:  It was like deja vu all over
again.  First, the market reacted immodestly to headlines indicating there
was little chance of pre-election fiscal stimulus in the US.  It was
hardly new news.  Then the market seemed to react with surprise that there
was no last-minute breakthrough in the UK-EU trade negotiations.  Prime
Minister Johnson could abandon the talks, but his chief negotiator had already
judged that a deal was still possible, and this seems to allow negotiations to
continue.  The firm close in US equities failed to carry over much to Asia
Pacific trading earlier today.  Only Hong Kong and Indian equities
gained.  In Europe, the Dow Jones Stoxx 600 is recouping around a third of
yesterday’s 2% drop and is snapping the three-day slide.  US shares are
steady to a little

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UK Blinks on Threat to Walk Away on Eve of EU Summit

16 days ago

Overview: Turn around Tuesday saw the dollar bounce, particularly against the Australian dollar and European currencies, among the majors.  Sterling pared earlier losses on reports that the UK would not walk away from the talks just yet, while the euro remains on its back foot. Emerging market currencies are mixed, leaving the JP Morgan Emerging Market Currency Index nursing small losses for the third consecutive session.  The precious metals tumbled yesterday but have also steadied today, with gold near $1900.  Led by the real estate and financials, the S&P 500 snapped a four-day advance yesterday but spent the session within the range seen Monday, leaving the opening gap untouched.  Though Hong Kong reopened after being closed due to a storm and posted small gains, Asia Pacific markets

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Markets Shake and Dollar Goes Bid

16 days ago

Overview:  A combination of the surging virus, threatening the slow recovery that was already losing momentum, the lack of new stimulus in the US, and market positioning is seeing risk unwind in a big way today.  Equities are selling off.  Led by a 2% drop in Hong Kong, Asia Pacific equities tumbled, with the exception of Australia, where signals from the central bank suggested more easing may be around the corner.  The Dow Jones Stoxx 600 is off for a third day, but the nearly 2.2% decline is the largest drop since September 21.  US shares are also lower.  The S&P 500 closed the gap from Monday’s higher open yesterday, and next is the gap from last Friday (~3447.3-3458.0).  Benchmark 10-year yields are lower, led by Australia’s seven basis point decline.  Core bonds in Europe are

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Markets Look for Fresh Incentives

18 days ago

Overview:  The S&P 500 and NASDAQ gapped higher for the third consecutive session and continued to advance.  The benchmarks reached their best level since early September.  Hong Kong markets were closed due to a storm, but the MSCI Asia Pacific gained for the seventh consecutive session. Most markets were higher, though Taiwan and South Korea were exceptions.  European stocks are struggling a bit, and the consolidative tone is threatening to end the three-day advance.  European yields are softer, and the peripheral yields are slipping to new record lows, and premiums over German continue to narrow.  The US 10-year yield is off a couple of basis points, after not trading yesterday to about 0.75%.  The dollar is mostly firmer, though the New Zealand and the Swedish krona are a little

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Yuan in Spotlight in Consolidative Session

19 days ago

Overview:  Led by 2-3% gains in Hong Kong and China, the MSCI Asia Pacific Index rose for the sixth consecutive session is pressing against the high for the year.  European stocks are firmer, and the Dow Jones Stoxx 600 is up around 0.5% near midday, and shares are also trading firmer.  The strong close before the weekend warns of the risk of a gap higher opening, which would be the third in a row, a cautionary sign of an over-extended market in some technical analysis.  While the US stock market is open today, the US and Canadian bond markets are closed for national holidays.  European bond yields are softer after an apparent media blitz by some of the dovish ECB members.  The long-end of the Italian and Spanish curve are at new record lows.  The US dollar is firmer against most of the

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Dollar Drop Continues, but be Careful of a Third Gap Higher in the S&P 500

20 days ago

The US dollar fell against most of the world’s currencies last week and looks poised to move lower in days ahead.  When the presidential tweets seemed to dash lingering hope for more fiscal support on October 6, the dollar bounced, and stocks slumped.  Despite the technical signals, follow-through dollar buying was minimal, and the equity market quickly recouped all the lost ground plus some. Some participants expect the increase in long-term rates to be supportive of the dollar, but most are bearish the greenback, and the consensus forecasts reflect this attitude.  Listening to investors, participating in panel discussions, reading widely,  it appears a new meme is emerging that frames the bearish outlook in terms of the twin deficits:  The US reported its largest monthly trade deficit

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Macro: Tracking the Loss of Momentum

20 days ago

The two axis around which risk appetites gravitated for the past six months is in full force next week.  The first is Covid-19 itself.  Many countries are experiencing a new intensification of the virus spread, including wide swathes of Europe and more than half the US states.  New social distancing rules are being (re-)imposed, which cannot have constructive consequences for near-term economic consequences. Canada’s Trudeau warned that his country was at a tipping point for the second wave.  

With some trepidation, the northern hemisphere heads for winter and less outdoors just as many people’s acceptance of the limitations of the pandemic grows thin.  China claims to have been using its own expedited vaccine on hundreds of thousands of people before finishing phase three testing to

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Animal Spirits Return

22 days ago

Overview:  The on-again-off-again fiscal stimulus in the US is back on as the White House now supports a broad stimulus program, but not as big as the Democrats $2.2 trillion package.  It is the narrative being cited as the rebuilding of risk appetites is the wobble earlier in the week.  Chinese markets re-opened with a bang. Shanghai led the Asia Pacific bourses higher with a 1.7% gain, and the onshore yuan rose 1.1%, a bit more than expected after a favorable fix by the PBOC.  Europe’s Dow Jones Stoxx 600 moved above the 200-day moving average yesterday and remains above it today.  It is up modestly, for the sixth session of the past seven.  The S&P 500 and NASDAQ gapped higher yesterday, closed near the highs, and look likely to gap higher again. Benchmark 10-year bond yields are 1-3

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Markets Catch Collective Breath

23 days ago

Overview:  The S&P 500 and
NASDAQ closed at their highest levels in around a month yesterday, recouping Tuesday’s presidential tweet-driven drop.  We thought the market
overreacted to the end of the fiscal talks as many had already recognized that
a stimulus agreement was unlikely before the election, but the near
round-trip seen in stocks and bonds was surprising. The dollar surrendered the lion’s share of the gains it had registered, and the US 10 and 30-year yields approached four-month highs.   Led by more than 1% gains in Taiwan, Australia, New Zealand, and India, the MSCI Asia Pacific Index rose for the fourth consecutive session and reached its best level in about three weeks.   Europe’s Dow Jones Stoxx 600 is about 0.5% higher near midday in Europe and is pushing above its 200-day

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The Day After

24 days ago

Overview:  President Trump’s tweet announced that negotiations with the House Democrat leadership had collapsed, and there
will be no further talks until after the election. Many economists had
been removing it from their Q4 GDP projections, but the market was caught wrongfooted. 
Risk came off.  Equities were sold.  Emerging markets were sold, and
the dollar and yen were bought.  The S&P 500 and NASDAQ were at
session highs and reversed to session lows, and the yield curve stopped
steepening.  However, the ripple effect has been mild, and the dollar’s
gains have been pared.  Most equity markets in Asia Pacific rose and the
MSCI regional benchmark rose for the third consecutive session.  European
stocks are trading lower, and the Dow Jones Stoxx 600’s four-day advance is at
risk.  US

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The Dollar Tests Key Supports and Pauses

25 days ago

Overview:  Market moves have stalled.  The MSCI Asia Pacific Index did manage to extend Monday’s gains, but other markets are heavier.  Europe’s Dow Jones Stoxx 600 is snapping a three-day advance.  The communications sector is the sole standout, though financials and energy are little changed.  Most sectors are lower.  US shares are also paring yesterday’s gain.  The sell-off in US Treasuries, the most in a month, stopped, and the US 10-year yield is a couple of basis points lower near 0.76%.  European benchmark yields are slightly lower, while the yields in the Asia Pacific played catch-up after the US yields rose eight basis points.  The dollar initially extended its loss but recovered after several key chart points were tested, including $1.18 in the euro, $1.30 in sterling, and

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Monday’s Dollar Blues

26 days ago

Overview:  New actions to contain the virus are being taken in the US and Europe, but investors are looking past it and taking equities and risk assets, in general, higher to start the new week.  MSCI Asia Pacific recouped most of last week’s 0.7% loss with gains of move than 1% in Japan, Hong Kong, South Korea, and Australia.  Coming fiscal support helped lift the Australian market by more than 2.5%.  Europe’s Dow Jones Stoxx 600 is up for a third consecutive session and is nearing the 200-day moving average that has checked the benchmark over the last three months.  US shares are trading with a clear upside bias.  Meanwhile, yields are edging higher, and the US benchmark 10-year yield is near 71 bp, while European yields are also slightly firmer.  The dollar is under some pressure,

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Sterling’s Resilience Stands Out

27 days ago

A week ago, the dollar’s technical condition suggested there was potential for one more push higher in the correction that began on September 1.  However, instead, the dollar fell against all the major currencies and many emerging market currencies as well.  The JP Morgan Emerging Market Currency Index rose by a little more than 0.5%.   The dollar’s decline in recent days met initial retracement targets of its recent advance, and the momentum indicators seem to point to additional near-term losses.

Many Asian markets were closed for several days last week, but Europe’s Dow Jones Stoxx 600 finished about 1.5% higher, and the US S&P 500 snapped a four-week decline.  Although the news that the US president and First Lady contracted the virus put a dent into risk-taking ahead of the

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Macro: The Policy Mix and the Quad

28 days ago

The pandemic has synchronized the global economic cycle.  Whether one was expanding in Q4 19 or Q20, or contracting, like Mexico and Japan, nearly every country experienced a dramatic loss of output followed by what appears to have been a sharp recovery in Q3.  The magnitude of the recovery is of interest to investors, but they are looking ahead and, as the calendar turns, the economies still appear to be moving in sync, and growth rates will likely slow dramatically.  The emerging consensus is for the EMU and UK to grow around 2.5%-3.5% in Q4, and for the US and Japan to expand by closer to 1.25% (quarter-over-quarter).

Of course, there is great uncertainty around the trajectory of the economies because there is great uncertainty around the virus.  While hopes for an effective

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POTUS Infected: Is this the October Surprise?

29 days ago

Overview:  Before a US election, there is often speculation of a last-minute game-changing development.  News earlier today that the US President and his wife have tested positive for the Covid virus has injected a new unknown into not only the US election but the markets as well.   Many centers in Asia (China, HK, Taiwan, South Korea, and India) remain closed, while Australia and Japan surrendered early gains.  European shares have recouped some of the initial sharper losses, and near midday the Dow Jones Stoxx 600 is off about 0.6% to hold on to about a 1.2% gain for the week.  US shares are around 1.2% lower.  The bonds are not drawing much of a safe-haven bid. The US 10-year benchmark yield is around 67 bp.  European yields are off slightly, though Italian bond yield is off a bit

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