Wednesday , September 18 2019
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Tag Archives: CAD

Jump in Yields Didn’t Derail Equity Rally While Sterling Rallies Ahead of the Weekend on (misplaced) Brexit Optimism

The most striking thing about last week's price action was the surge in US yields.  The 10-year yield jumped about 34 basis points, the most in three years and returned to levels not seen since August 2 (1.90%).  A deluge of investment-grade corporate bonds and US Treasuries ($78 bln auctioned to lukewarm reception), coupled with an acceleration of core CPI (highest in 11 years), optimism on the trade front, and Mnuchin's insistence on pushing forward with an extra-long bond, (50, and...

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Debt Deal Help Lifts the Dollar

Overview: The gains in US equities and the apparent US budget agreement has underpinned equities today and the US dollar.  Asia Pacific equities recouped yesterday's losses, and Europe's Dow Jones Stoxx is posting gains for the third consecutive session, helped by some earning beats, to probe two-week highs.  US shares are firmer.  Benchmark 10-year yields are mixed with the Asia Pacific softer and European firmer.  Despite elevated political tensions in Italy, Italian bonds are bucking...

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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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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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Collective Sigh of Relief Lifts Equities, Yields, and the Dollar

Overview: A global sigh of relief that the US will not tariff all its imports from Mexico.  Equities are all higher, and the weekend demonstrations in Hong Kong over a bill allowing extraditions to the mainland for the first time did not deter investors from bidding up the Hang Seng over 2.3%, the most this year.  European equities are following suit.  The more modest 0.4% gain through the morning session is the fifth gain in the past six sessions.  US shares are trading higher and the...

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Canada, Mexico, and the USMCA

The US dollar closed today above CAD1.3500 for the first time since January 2.  Despite the setback, the Canadian dollar is the strongest of the major currencies year-to-date with a little less than a one percent gain.  The yen, in second, has is up about 0.2% (~JPY109.50).  Among emerging market currencies,  the Mexican peso's 2.6% gain puts it in in second place behind the Russian rouble's 7.2% appreciation.  It is a gross simplification to suggest that the currency moves are...

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April Monthly Currency Outlook

Poor economic data and soft inflation saw several central banks, including the Federal Reserve and European Central Bank, take a dovish turn in March. Contrary to expectations that interest rates would rise as the G3 central banks were no longer adding to their balance sheets on a combined basis. The sharp drop in interest rates and the flattening of curves in March is one of the key factors shaping the investment climate. The fall in yields has occurred even as oil prices...

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Equities Bounce While Bonds Pullback to End Q1

Overview:  The global growth scare may be subsiding.  It had been fanned by the ECB and Fed statements and projections.  Poor US jobs growth reported in early March and the poor flash EMU PMI late in the month contributed.  The slowdown in China and the flurry of measures to combat it also had a role.  The economic soft patch, late in the business cycle, spooked investors and policymakers but better data has already begun, and more is likely in the coming days.  These...

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Brexit Uncertainty Deepens as Parliament is Divided, while Turkey’s Short Squeeze Falters

Overview:  The lurch lower in global interest rates continue.  The US 10-year yield is at new 15-month lows, five basis points through the average effective Fed funds rate.  Late yesterday, it appeared that 10-year German Bund yields slipped below similar Japanese government bond yields for the first time since  Q4 16, but when the JGB market opened, it the 10-year JGB yield fell a couple more basis points to minus 10, the most negative since August 2016,  The 10-year Bund...

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Global Bond Rally Continues, Greenback Remains Firm

Overview: The US 10-year yield is trading below the Fed funds target.  The two-year yield is trading below the lower end of the Fed funds target range.  A warning by New Zealand that the next rate move could be a cut sent New Zealand and Australian yields to new record lows.  In Japan, the 10-year yield slipped below the overnight unsecured call rate.  Benchmark yields in Europe are mostly lower, with the yield on the 10-year German Bund is slumping to new three-year lows...

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