Saturday , October 31 2020
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The author 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.

Marc Chandler

Investors Scared Before Halloween

 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...

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Markets Continue to Struggle

 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...

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Introducing the Bannockburn World Currency Index

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...

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Animal Spirits Called in Sick

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,...

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Markets Take Collective Breath and Beijing Tweaks Fixing Mechanism

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...

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Troubling Start of the Important Week

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...

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The Greenback does Not Look Ready to Break Down Quite Yet

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...

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Big Week Ahead

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...

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

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...

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Greenback Stabilizes

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...

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