• Investors will have a busy week sorting news and data

    Key Global Economic News Help the Dollar and U.S. Equities

    As the 24-hour session has progressed, the US dollar and equities have stabilized and turned higher.  Indeed as US traders prepare to return, stocks and the dollars are trading near session highs.  Oil prices are also trading higher.  Core bonds are a bit heavier, and the US 10-year yield has moved back above 2.10%.  News that Libya declared force majeure at two of its oil terminals appeared to have turned the oil market around.  It had continued to fall in the early hours the UAE warned it was prepared for oil prices to slump to $40 a barrel. 

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  • Oil and the Dollar Dominate the Global Growth Challenges

    Global Challenges are Mounting as Oil Continues to Slip

    The US dollar is trading within yesterday's ranges against the major currencies. The Canadian dollar is the main exception. It is pushing lower still, with the greenback pushing a little beyond CAD1.1550. The main development today is the continued drop in oil prices. 

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  • Two noteworthy news items were the budget deficit and t-bill yields

    The U.S. Budget Deficit and a T-Bill Yield High

    The markets have been more tumultuous than usual in recent days.  There were two important developments for investors, but many likely missed.

    First, yesterday the US reported the November budget deficit. At $56.8 bln, it was more than 10% less than economists’ projections.  The budget shortfall in November 2013 was $135.2 bln.

    The new fiscal year is two months old.  Thus far, the budget deficit for the FY15 is $178.5 bln down from $225.8 bln in the first two months of the last fiscal year.   

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  • The ECB needs to be more flexible

    Notes on the Second ECB TLTRO Participation

    Today we learn of the participation of the second opportunity to borrow funds from the ECB under the Targeted Long-Term Repo facility.  Recall that this year's access was limited to 7% of a bank's loan book (loans to households and businesses excluding mortgages).  Next year's access is somewhat linked to growth of that loan book. 

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  • Market stabilization factors are fighting the big moves

    Market Participants Attempt to Smooth Big Moves

    The markets have been subject to large moves in recent days.  Some, including the dollar, were counter-trend moves.  Some, like oil, were accelerations of the existing trends.  There have been a number of surprise developments today, including the less dovish Reserve Bank of New Zealand and the 25 bp cut from Norway's central bank.  The markets are trying to stabilize, and the dollar's correction appears to have exhausted itself.  

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  • How will the LDP do in Japan's election?

    A Very Short Campaign in Japan is Underway

    As the official election campaign rolled out last week, the media are still trying to get a handle on what the upcoming Japanese election is all about. This is ‘the election Japan didn’t need to have’ or the election ‘that’s not about anything in particular’, except securing Prime Minister Abe’s and the Liberal Democratic Party (LDP) survival in the longer term.

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  • Abe will likely win, so say the odds

    Abe's Calculated Move to Stretch a Political Career

    The incumbent Liberal Democratic Party (LDP) seems to be cruising towards a victory in the snap election to be held on 14 December. But beware of interpreting this as a ringing endorsement of Prime Minister Shinzo Abe. Instead, the likely result shows just how weak Japanese politics has become.

    Prime Minister Abe’s decision to call the election two years ahead of schedule appears odd, especially given that the LDP–New Komeito coalition currently holds a two-thirds majority in the lower house.

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  • Differing strategies between China, Japan and South Korea challenge their FTA

    Complicated Geopolitics Challenge an Asian FTA

    The fifth round of the China–Japan–South Korea Free Trade Agreement (CJK FTA) negotiations concluded in Beijing on 5 September. The three countries hope the negotiations will finish in 2015, but this partly depends on the progress of the Trans-Pacific Partnership (TPP) negotiations.

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  • The job report isn't what it used to be

    A Backstory on the U.S. Jobs Report

    If there was one report to count on to shake up markets, it was the monthly US jobs report.  Part of the issue was that of all the economic data that the US reports, economists had the greatest difficulty in forecasting the monthly change in non-farm payrolls.  It is simply the residual of a great churn---many job gains and losses--and there are not many reliable inputs.  Another source of volatility was what the labor market news meant for policy.

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  • The dollar trend is intact, moving higher on the jobs report

    The Dollar Moves Up on Another Strong U.S. Jobs Report

    The strength of the US employment report is seeing the dollar jump across the board.  The divergent theme is out in relief.  The 321k rise in non-farm payrolls is the strongest print of the year and is the second monthly increase above 300k since early 2012 (the other one being this past April).  On top of that, the back months’ figures were revised up by 44k.  

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