Thursday , July 18 2019
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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

Back to the Well Again

Overview:  After slapping punitive tariffs on structural steel from China and Mexico last week, US President Trump threatened to end the tariff truce with China because it has not stepped up its purchases of US agriculture products.  Trump said the tariff freeze was in exchange for ag purchases, but at the time it seemed as if granting licenses to US companies to sell to Huawei was the quid pro quo.  In any event, the comments helped snap a five-day advance of the S&P 500 and...

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Intervention: Huff, Puff, and Bluff

Economists, strategists, and reporters continue to have a difficult time getting a handle on the disruptive American President.  They insist on taking seriously every feint of a person who appears to relish keeping his friends and adversaries off-balance. One continues to fuel a discussion that is generating more heat than light.  Previously, Trump accused one or another country of currency manipulation.  Yet, his own Treasury Department, which has softened the criteria, has not cited...

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Sterling Weakness Punctures Subdued Session

Overview: Summer in the northern hemisphere contributing to the subdued activity in the global capital markets. The MSCI Asia Pacific index stalled after a four-day advance, with Japanese, Chinese, and Australian equities offsetting gains in Taiwan, South Korea, and India.  Europe's Dow Jones Stoxx 600 is flattish, struggling to extend its three-day rally.  US shares are also little changed after the S&P 500 rose for the fifth consecutive session yesterday to new record highs.  It...

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Marking Time on Monday

Overview:   The new record highs in US equities ahead of the weekend coupled with Chinese data that suggested the economy was gaining some traction as Q2 wound down is helping underpin risk appetites to start the week.  Japanese markets were closed today, but equities were mostly firmer in the Asia Pacific regions, markets in China, Hong Kong, Taiwan, and India firmed.  Europe's Dow Jones Stoxx 600 was marginally higher through the morning session, and US shares also enjoyed a firmer...

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Near-Term Dollar Outlook: What the Charts may Say

The dollar had a challenging week.  The Chair of the Federal Reserve confirmed as much as possible a rate cut at the end of the month. The market understood this as a validation of its expectations and pushed the implied yield of the January 2020 fed funds futures contract down six basis points to 1.715%.  The low, and what we have suggested is peak dovishness, was 1.555% on June 20. As the central bank meetings are awaited later in the month, the most likely near-term scenario may be...

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What to Watch if Fed and ECB are Committed to Easing

There is little doubt after the Federal Reserve Chairman Powell's testimony last week and the FOMC minutes that a rate cut will be delivered at the end of the month.  Similarly, after comments by several ECB officials and the record of their recent meetin.g confirms it too is prepared to adjust policy.  The timing of the ECB's move is more debatable, an adjustment at the July 25 meeting appears to have increased.  While a debate over what officials should do, often swamps...

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Greenback Limps into the Weekend

Overview:  Higher than expected US CPI and the second tepid reception to a US bond auction this week pushed US yields higher and helped stall the equity momentum. Asia Pacific yields, especially in Australia and New Zealand jumped 8-10 bp in response, and Spanish and Portuguese bonds bore the burden in Europe.  Barring a sharp decline today, the US 10-year yield is higher for the second consecutive week, something not seen in three months.  Equities are mostly firmer, but small gains...

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Powell Spurs Equity and Bond Market Rally, While the Greenback Falls Out of Favor

Overview:  Fed's Powell confirmed a Fed rate cut at the end of this month by warning that uncertainties since the June FOMC had "dimmed the outlook" and that muted price pressures may be more persistent.  It ignited an equity and bond market rally (bullish steepening) while the dollar was sold. The MSCI Asia Pacific Index rose for the second session, led by gains in South Korea and Hong Kong.  Benchmark 10-year yields have slipped lower, with the Asia Pacific and core European yields...

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North American Focus: Poloz and Powell

Overview:  The US Treasury market is retreating for the fourth consecutive session ahead of Fed Chairman Powell's testimony before Congress.  It is the longest losing streak in six months, and the 10-year yield has risen 15 bp over the run.  This is helping drag up global yields, and today Asia Pacific yields mostly rose 2-3 basis points while core European bond yields are 5-7 bp higher and peripheral yields up a little less.  The small gain in the S&P 500 yesterday failed to help...

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No Turn Around Tuesday, as Equities Extend Losses and the Greenback Remains Firm

Overview:  Global equity benchmarks are headed for their third consecutive loss today as caution prevails at the start of Q3 after a strong first half.  Ten-year benchmark yields are edging higher after a soft start in Asia.  Italian bonds continue to outperform.  Greek bonds have been set back as the new government reiterated its commitment to ease fiscal commitments as if Tsipras did not try, and got a similar rebuff.  The dollar is firmer against the major currencies and most...

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