Saturday , January 18 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

China and the UK Surprise in Opposite Directions

Overview:  Helped by new record highs in the US, global stocks are moving higher today. Nearly all the markets in the Asia Pacific region advanced and the seventh consecutive weekly rally is the longest in a couple of years. Europe's Dow Jones Stoxx 600 is at new record highs and appears set to take a four-day streak into next week. US shares are trading firmly.  Since the end of last September, the S&P 500 has fallen in only three weeks. A shockingly poor UK retail sales report is...

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Markets Look for New Cues with US-China Trade Pact Signed

Overview: The global capital markets are calm today as investors await fresh trading incentives. New record highs in the US equity indices gave Asia Pacific stocks a lift, though China and Taiwan were notable exceptions. Europe's Dow Jones Stoxx 600 is firm new record highs set last week.  US equities are edging higher in Europe. Benchmark bond yields are little changed. European yields are a little lower, while the US 10-year is steady around 1.78%. UK short-term rates are steadying...

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Phase 1 Trade Deal Shifts Terrain of US-China Rivalry

Overview:  News that US tariffs on China will remain until through at least the November US election and continued US attempts to stymie China (e.g., more curbs on Huawei under consideration and stepped up efforts to force it to cut subsidies to business) have taken some momentum from the push into risk assets.  The MSCI Asia Pacific Index snapped a four-day advance today, with only Australian equities among the large regional markets able to sustain upticks.  Europe's Dow Jones Stoxx...

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China was a Currency Manipulator for a Few Months

Overview:  The leaked US decision to lift the currency manipulator designation on China was the latest fodder fueling the new record highs in the S&P 500. The risk-taking appetite helped extend the rally in the MSCI Asia Pacific Index for the fourth consecutive session. Europe's Dow Jones Stoxx 600 is little changed and trying to snap a two-day decline. US shares appear directionless in the European morning. Benchmark yields are slightly softer in Europe and US Treasuries, with...

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Brexit Update

Three and half years after what was initially a non-binding referendum, the UK has seen its way to leave the EU.  The House of Commons passed the necessary legislation last week as Tories enjoys a parliamentary majority.  The House of Lords takes up the measures now. Although the Conservatives do not have a majority and a vigorous debate is expected, the unelected body is most unlikely to block Brexit.   What happens next?  The UK will formally exit the EU at the end of the month. ...

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Dismal Data Undercuts Sterling and Boosts Chances of a Rate Cut

Overview: There are two big stories today. The first is the large scale protests in Iran after the government admits to accidentally shooting down the commercial airliner amid the fog of war. The market impact seems minimal but fueling speculation that this, coupled with the economic hardship related to the US embargo, could topple the regime. Second, the UK reported that the economy unexpectedly contracted in November. With the backdrop of recent dovish commentary by a few officials,...

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Technicals: The Underlying Signal

The heightened geopolitical risks and then the unwind drove the price action in the capital markets last week, the first full week of the new year.  These are the kind of markets that whipsaw even the most experienced and nimble among us.  We review the recent price action and technical condition of some of the major currencies and other instruments that are frequently driven by the same macro forces, or influence the foreign exchange market with the hope of being able to identify the...

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Back to Macro?

The US-China trade conflict and then US-Iran confrontation distracted investors from the macroeconomic drivers of the capital markets.   It is not that there is really much closure with the exogenous issues, but they are in a less challenging place, at least on the surface.  A Chinese delegation, led by the Vice-Premier Liu He, who spearheaded the negotiations, will participate in the signing ceremony on January 15.. While China has agreed to buy $200 bln more of US goods over the...

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Jobs Friday: Asymmetrical Risks?

Overview:  The first full week of 2020 is ending on a quiet note, pending the often volatile US jobs report.  New record highs US equities on the back of easing geopolitical anxiety is a reflection of greater risk appetite that is evident across the capital markets.  Asia Pacific equities mostly rose today, though Chinese shares and a few of the smaller markets saw small losses.  The MSCI Asia Pacific Index rose about 0.2% on the week, the sixth consecutive weekly advance.  European...

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Animal Spirits Roar Back

Overview:  The S&P 500 recovered from a 10-day low to reach a new record high, which set the tone for the Asia Pacific and European markets today.   The MSCI Asia Pacific Index jumped by the most in a month with the Nikkei's 2% advance leading the way.  More broadly, the markets in Taiwan, South Korea, Hong Kong, India, and Thailand all rose more than 1%.  Europe's Dow Jones Stoxx 600 was up a milder 0.5%, but its third successive advancing session has seen new record highs.  US...

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