Tuesday , January 18 2022
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Tag Archives: Germany

Bi-Polar Market: It is and It isn’t

Overview:  Sentiment is unhinged.  It has swung from fears that the Fed is behind the inflation curve and unemployment is below the long-term equilibrium rate to the central bank is going to kill the economy by raising rates and allowing the balance sheet to shrink too quickly.  Today's US data for retail sales and industrial output may play on such fears.  Both are expected to have slowed sequentially (retail sales may fall outright even when the dismal auto sales and gasoline are...

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Treasury Yields Continue to Move Higher

Overview: The new week does not mean new forces.  The dollar is recouping some of what it lost ahead of the weekend after the disappointing US jobs growth, but yields continue to rise and many risk assets, equities and crypto continue to struggle.  Asia Pacific equities were mixed.  With Tokyo closed, Hong Kong, China, Taiwan, and India advanced.  Last week the MSCI regional benchmark fell almost 0.5%.  Europe's Stoxx 600 is off for a third session.  Only energy and financials are...

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As The Fed Seeks To Justify Raising Rates, Global Growth Rates Have Been Falling Off Uniformly Around The World

Sentiment indicators like PMI’s are nice and all, but they’re hardly top-tier data. It’s certainly not their fault, these things are made for very times than these (piggy-backing on the ISM Manufacturing’s long history without having the long history). Most of them have come out since 2008, if only because of the heightened professional interest in macroeconomics generated by a global macro economy that can never get itself going.What PMI’s do have going for them is that they allow us to...

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Rising US Yields Push the Yen to New Five-Year Lows

Overview:  The surge in US yields helped lift the dollar but did not block the equity rally.  The 10-year Treasury yield surged 12 bp yesterday and the 10-year break-even widened amid ideas that the Omicron variant will boost price pressures.  Japanese and Australian markets re-opened and led the regional equity advance with nearly 2% gains.  Taiwan and Singapore also posted strong advances.  The PBOC withdrew liquidity from the banking system, and this seemed to weigh on Chinese and HK...

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Inflationary Overheating, Tapering and Terminating QE, We’ve Seen These Before And It Didn’t End The Way It Was Supposed To

The economy was in danger of running hot, too hot they all said. In order to stay ahead of such inflation potential, as central bankers saw it, first it would be necessary to wind down quantitative easing. Taper then terminate. After that, rate hikes.Hawks buzzing around everywhere.But Mario Draghi’s ECB had a problem. The inflationary pressures were there, he reasoned, just no one including Mario himself could find them in evidence. More worrisome than that, Europe’s economy also appeared...

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Markets Turn Cautious Ahead of Tomorrow’s US CPI

Overview: The euro has come back offered after its seemingly inexplicable advance yesterday.  The dollar is firmer against most major currencies today, with the yen an exception after JPY114.00 held on yesterday's advance.  Most emerging market currencies are also softer, with a handful of smaller Asian currencies proving a bit resilient.  Most large bourses advance in the Asia Pacific region, except Japan and Australia.  Europe's Stoxx 600 is steady after retreating late yesterday while US...

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Markets Calmer, Awaiting Fresh Incentives

Overview:  The capital markets are calmer today, and the fear that was evident at the end of last week remains mostly scar tissue. Led by gains in Japan, China, Australia, New Zealand, and India, the MSCI Asia Pacific Index extended yesterday's gains.  Europe's Stoxx and US futures are firm.  The US 10-year yield is softer, around 1.43%, while European yields are mostly 1-2 bp lower.  The Norwegian krone and euro lead major currencies higher against the greenback, but the New Zealand dollar...

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Global Trade Case(s) Behind Global ‘Growth Scare’

The US Census Bureau today reported that US imports of goods and services reached a record monthly high of $290.7 billion in October 2021. Just goods alone, the figure was $241.1 billion, which was 11% greater than the previous peak set way back in October 2018. With (questionable) media accounts continuing to highlight West Coast port traffic, there may not otherwise seem any end in sight to the “inflationary” goods boom as consumer spend themselves to the moon. The money illusion,...

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Animal Spirits Roar Back

Overview:  A return of risk appetites can be seen through the capital markets today, arguably encouraged by ideas that Omicron is manageable and China's stimulus.  Led by Hong Kong and Japan, the MSCI Asia Pacific rose by the most in three months, while Europe's Stoxx 600 gapped higher, leaving a potentially bullish island bottom in its wake.  US futures point to a gap higher opening when the local session begins.  The bond market is taking it in stride.  The US 10-year Treasury is slightly...

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Euro$ Futures: There Be Landmines

This wasn’t meant to be a running tally. In fact, that was my major point in yesterday’s curve inversion missive; the thing inverted, it stayed inverted for a second day but maybe won’t change much for some time moving forward. Boring and consistent, what matters most in this first stage is only that the inversion sticks rather than expecting big changes in it.We’ll come back to it if or when something changes worth notice. Throw that out the window for Day 3, however. Somewhat surprising...

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