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Tag Archives: federal reserve

Turn Around Tuesday or Dollar Rally Resumes?

Overview:  Firming long-term US yields have lent the dollar support after trading heavily yesterday.  The greenback is around 0.15%-0.50% higher against the major currencies.  The Japanese yen and Canadian dollar are among the more resilient, and the Australian dollar and sterling among the heaviest.  Emerging market currencies are mostly lower, except the South Korean won and Turkish lira.  Even the Hungarian forint, where the central bank is widely expected to be the first EU country to...

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Dollar Surge Stalls

Overview:  Pressure on equities seen last week carried over into Asia and Europe today. The MSCI Asia Pacific Index fell for the fourth consecutive session, led by more than a 3% decline in the Nikkei.  Australia, Taiwan, and Hong Kong bourses fell by more than 1%.  European equities opened lower, but have turned higher. The Dow Jones Stoxx 600 is up about a third of a percent in late morning turnover.  US futures have found some bids and are up around 0.5%.  The US 10-year yield is soft at...

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Weekly Market Pulse: Never Mind

I thought of Gilda Radner this past week. Actually, I thought of a character she created on the original Saturday Night Live, Emily Litella, who was a regular on the Weekend Update segment. She’d start to rant about something topical, getting it completely wrong at which point Jane Curtin or Chevy Chase would explain it to her and she’d respond. “Oh. Well. That’s completely different. Never mind.” (For those of you too young to remember Gilda, here’s a...

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How Long is Transitory?

The Bank of England meeting on June 24th finishes this round of major central bank meetings.  At its last meeting, Bailey & Co reduced the weekly bond-buying.  The extension of social restrictions well into July provides added reason to be cautious, though economic activity is accelerating and consumer prices are rising faster than the medium-term target of 2% for the first time in three years.   British growth is likely peaking this quarter, perhaps a little above 4%. It would put H1 21...

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Markets Quiet Ahead of Triple Witching

Overview: After some dramatic moves over in the immediate post-Fed period, the markets have quieted. The kind of volatility that is sometimes associated with triple witching expirations in the US may have already taken place.  Asia Pacific equities were mixed, but the MSCI benchmark finished with its second consecutive weekly decline.  Europe's Dow Jones 600 ended its nine-day run with a small loss yesterday and additional slippage so far today. Still, near midday, it is holding on to about...

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Fed Rocks the World

Overview: A more hawkish than expected Federal Reserve sent the US dollar and interest rates higher and spurred an equity sell-off.  The knock-on effect sent ripples through the capital markets today.  Most equity markets in the Asia Pacific region fell.  China, Hong Kong, and Taiwan were notable exceptions.  Europe's Dow Jones Stoxx 600 is snapping a nine-day advance, with losses led by information technology and utilities.  Financials and energy sectors are posting modest gains.  US...

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Yields, Not Dots; Another Example of Why Inflation Had(s) No Chance

The FOMC held a meeting and that can only mean dots. These are the individual policymaker’s views on where the federal funds target range might end up down the road. The latest update for the June 2021 central bank conclave shows several more voting members projecting the first rate hikes to begin toward the end of next year, a supposedly very hawkish shift from the last time.While that may be true, it also doesn’t mean anything especially as it changes nothing about the latest inflation...

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FOMC: Words not Actions

The Federal Reserve's Open Market Committee meeting is the most important event in the week ahead.  It is not that it will take fresh policy action.  Rather its observations about the economy and its forward guidance are the focus.  Since the Fed last met in April, job growth has slowed, and prices have accelerated.  Job growth averaged 661k a month in Q1 but slowed to 419k in April and May. Other labor market metrics, like the weekly initial jobless claims, continue to trend lower.  The...

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Don’t Believe Sino-American Thaw or Fed’s Corporate Bond Divestment is a Policy Signal

Overview:  Market participants appear to be biding their time ahead of tomorrow's US jobs report as they digest recent developments.  The dollar is firmer, equities are mixed, and benchmark bond yields are a little firmer.  China and Hong Kong shares continue their recent underperformance, while most of the large markets in the Asia Pacific region edged higher.  Europe's Dow Jones Stoxx 600 is easing from record highs.  The utility and materials sectors are the largest drags.  US futures are...

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The Dollar Snaps Back

Overview: The US dollar is enjoying broad, even if not large, gains today following yesterday's recovery from three-year lows against sterling and four-year lows against the Canadian dollar.  The greenback is firmer against all the major currencies.  The Australian and New Zealand dollars the weakest, even though Australia reported stronger than expected Q1 GDP and its stock market was among the strongest in the region with a 1% gain.  Emerging market currencies are also weaker.  Turkey's...

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