Post date: 10/01/2022 12:50 The most dramatic moves in financial markets last week took place in fixed income markets. Treasuries continue to get pummelled as the Fed steps away from the bid and no one else appears to be interested in buying them. What’s remarkable is how little the dollar has benefitted from the spike…
Post date: 20/12/2021 17:04 The Federal Reserve made it clear that it is increasingly concerned about inflationary pressures at its December meeting, and the dollar reacted accordingly. The greenback rose against every G10 currency last week, together with sterling, which joined the dollar rally, as the Bank of England whipsawed markets yet again by hiking…
Post date: 13/12/2021 14:08 Early data on the omicron variant suggests that it’s no more virulent than previous variants, and may in fact be less severe. Risk assets worldwide understandably rejoiced. Stocks, commodities and credit all rallied, helped along by the extremely stimulative settings in both monetary and fiscal policy. Currencies mostly followed suit, with…
Post date: 29/11/2021 13:17 The typically placid Thanksgiving holiday in the US was rudely interrupted by a financial market sell-off, as traders reacted to the new, mutation-rich Omicron variant of the COVID virus discovered in South Africa. In currencies, the scare took the traditional form of a flight into safe-havens like the Japanese yen and…
Post date: 15/11/2021 10:40 The market response to the blowout inflation report out of the US was unusual. This time, the dollar had no trouble rallying against its G10 peers. However, the true stars of the week were emerging market currencies in Asia and Latin America, led by the Brazilian real. A possible explanation for…
Post date: 08/11/2021 10:46 G10 currencies continue to move in sync with the relative hawkishness of their respective central banks – though “hawkish” is measured relative to an extremely dovish consensus, in which monetary policies in developed countries remain extraordinarily loose in general. Sterling tanked on the surprise decision by the Bank of England not…
Post date: 25/10/2021 13:49 Inflation fears were further stoked by a massive upward surprise in quarterly inflation out of New Zealand last week. Sovereign bonds worldwide continue to sell-off, but as yet risk sentiment and, in particular, stock prices are proving resilient, as investors bet that corporations are well-placed to pass costs along and benefit…
Post date: 18/10/2021 10:49 One of the key correlations beginning to establish itself in the post-pandemic world seems to be the negative one between US inflation and the dollar. Yet another strong CPI report showed headline inflation above 5% for the fifth consecutive month. Yields did not move much as a response, but the US…
Post date: 11/10/2021 12:04 Last week provided strong validation for our view that inflationary pressures will be here for longer than G10 central banks expect. Oil prices, and the energy complex in general, rose strongly for the week, as did sovereign bond yields worldwide, driven higher by rising inflation expectations. For now, risk assets are…
Post date: 04/10/2021 11:00 Last week’s theme in markets continues to be aligned with our views and forecasts: burgeoning inflationary pressures worldwide and the possibility that central bankers, particularly in the developed world, may be already behind the curve in tightening policy. This was particularly evident across Eastern Europe, where hawkish surprises in central bank…
