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Tag Archives: Japan

China Disappoints and the Eurozone’s Contraction in Q1 may be the Nadir

Overview: The record high S&P 500 close failed to carry into the Asia Pacific region today.  A disappointing Chinese PMI and news that Beijing imposed wide-ranging restrictions on the financial divisions of 13 companies weighed on activity.  China's Tencent and Meituan were among the biggest losers, and Hong Kong's Hang Seng led the region lower with a nearly 2% drop.  Still, the Nikkei fell for the fourth consecutive week, and Korea's Kospi snapped a four-week advance.  Europe's Dow...

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Big Week Begins Quietly, with the Greenback Still Under Pressure

Overview: What promises to be a notable week has begun off quietly: the US, EMU, and South Korea report Q1 GDP.   The eurozone also provides its first estimate of April inflation.  Corporate earnings feature tech and financial firms.  Equities are mostly firmer in the Asia Pacific region and Europe.  Hong Kong, China, and Australia were exceptions, and their equities slipped lower.  Taiwan, South Korea, and Indian indices advanced.  Europe's Dow Jones Stoxx 600 snapped a seven-week advance...

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ECB in Focus, while Australia Pokes the Panda

Overview:  The capital markets are mostly quiet ahead of the ECB meeting, today's highlight.  The rise in US equities yesterday is helping lift equities today.  The MSCI Asia Pacific Index snapped a two-day fall, and Europe's Dow Jones Stoxx 600 is rising for the second session.  US shares are little changed.  The bond market is subdued as 10-year is hovering around 1.56%, while European yields are slightly firmer. The dollar is mostly firmer, with the Antipodeans and sterling the weakest. ...

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The Durable Hibernating of Vigilantism

When their paper came out in January 2010, Carmen Reinhart and Kenneth Rogoff put a number on bond vigilantism as it had been known in prior history. The idea behind investor fickleness was simple and intuitive: profligate governments who finance their ill spending ways by borrowing will literally end up paying the price once the exceed common sense. And when those governments do, the people they claim to represent are those who really end up footing the bill. The uncontroversial history...

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Treasuries: The Dog that Did not Bark

Overview: Like the dog that did not bark, the long-term US yields tumbled despite data that confirms the acceleration of the US economy and labor market.  The  10- and 30-year bond yields fell by the most since the end of February (~8.5 bp) and are little changed today.  European benchmark yields are 2-3 bp higher.  The greenback finished mostly softer, even though the euro and Canadian dollar nursed small losses.  It is mixed today against the majors, and the euro and Canadian dollar are...

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How China Is Offering an Alternative to the IMF

Yves here. This post makes an important follow-on to Michael Hudson’s discussion of how China and America are pursuing markedly differing economic strategies. While the IMF is extremely unpopular in Asia due to its heavy-handed management of the late 1990s currency crises, it’s not clear that China can yet step in. The reason that dollar swap lines are valuable is that most trade transactions are denominated in dollars. Any bank that aspires to be an international bank has to be able to clear...

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The Greenback Continues to Trade Heavily

Overview:  US officials called for a pause in the J&J vaccine, and the company has delayed the roll out in Europe.  The market seems to be looking past what appears to be an abundance of caution that now looks to last a few days.  Risk-taking appetites have barely been impacted.  Most equity markets are firmer today.  In the Asia Pacific region, Japan was a notable exception, and a poor core machinery order reported did not help.  Europe's Dow Jones Stoxx 600 is firm.  US shares are...

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Fragility (脆弱性)

For a short while, with reflation being traded in almost every corner of the global bond market, the Bank of Japan started to get “those” questions again. Almost of the humble brag variety. A few years ago, Japan’s central bank had widened what it considered to be an acceptable trading range for its 2016 QQE addendum of Yield Curve Control (YCC). In 2018, Haruhiko Kuroda’s regime stated that it would “allow” 10-year JGB yields anywhere between -20 bps and +20 bps. By late February 2021,...

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Disappointing Economic News in Europe, Elevated Geo-Political Risks, and Rising Yields Help the Greenback Recover

Overview:  The dollar has come back bid.  A disappointing and unexpected increase in the US weekly jobless claims pressed yields lower, with the 10-year falling a two-week low and seemingly dragging the greenback with it.  The greenback is trading higher against nearly all the major and emerging market currencies today amid heightened geopolitical risk, a stronger than expected rise in China's inflation gauges, and poor European industrial production data, despite the improvement in the...

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The US Dollar Comes Back Bid after Being Squeezed Yesterday

Overview:  European bourses are playing catch-up as they reopen after the long holiday weekend. The Dow Jones Stoxx 600 gapped higher and is trading at record levels, led by materials and financials.  Asia Pacific markets were mixed after US indices rallied yesterday.  A sharp fall in household spending may have weighed on Japanese shares. US futures are softer too.  The US 10-year yield is flat neat 1.70%, while European benchmark yields are 2-4 bp higher.  The dollar is paring yesterday's...

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