16 May, 2017 15:00
Rockefeller Treasury Services, Inc. Analytics | 16 of May
We have hard data and then we have Trump. Yesterday the Treasury capital flow data (for March) showed an inflow in long-term capital by $59.8 billion after $53.1 billion in Feb and compared to the 2016 monthly average of $20 billion. China bought $27.9 billion, the most in a year, and Japan, $3.4 billion.
15 May, 2017 15:00
Rockefeller Treasury Services, Inc. Analytics | 15 of May
Most commentary calls the Friday data “disappointing” even though it’s not all that bad. But the drop in yields and the knee-jerk follow-on by the dollar have to be respected. This brings up the interesting point that the market is not always right, contrary to market lore.
11 May, 2017 15:00
Rockefeller Treasury Services, Inc. Analytics | 11 of May
The controversy today concerns the Bank of England. Bloomberg writes “Bank of England Governor Mark Carney may never raise interest rates again. Economists at Bloomberg Intelligence and Morgan Stanley are among those who predict the central bank’s benchmark rate will be kept at 0.25 percent until at least March 2019 when Britain quits the European Union, leaving Carney with little time to increase rates before he steps down three months later.”
04 May, 2017 15:00
Rockefeller Treasury Services, Inc. Analytics | 4 of May
The Fed affirmed two rate hikes this year. Recent setbacks in various data are likely temporary. The probability of the next hike coming in June rose to nearly a dead cert, at least in the Bloomberg version (97%). US yields responded appropriately, rising in every tenor except the 30-year. The US 2-year is quoted at 1.314% while the German equivalent is -0.706, giving a premium of the US over the Schatz of 2.02%, a 3-week high.
18 April, 2017 15:00
Rockefeller Treasury Services, Inc. Analytics | 18 of April
Markets are not very good at pricing geopolitical risk. On Friday it seemed as though the yen should keep rising on the conflict between the US and North Korea (and never mind that Japan itself is involved), but otherwise, the dollar should be strong on the hawkish Fed.
14 April, 2017 15:30
Rockefeller Treasury Services, Inc. Analytics | 14 of April
We get important data today, CPI and retail sales, but markets are closed. Banks are open, which is why the spot FX market is open, but with Europe closed, we can’t expect much action. London is closed Monday, too, making FX even thinner. The CME holiday schedule shows Globex FX futures are closed and will reopen at 4 pm Sunday (3 pm ET).
12 April, 2017 15:30
Rockefeller Treasury Services, Inc. Analytics | 12 of April
The world is worried about Trump’s ability to rise to the geopolitical challenges thrown at him in the first 100 days. Every president gets provocation from some hostile party at the start of his administration. After the travel ban and health care bill debacles, not to mention the FBI investigation into Trump campaign connections to Russia, Trump has a tough row to hoe.
11 April, 2017 15:30
Rockefeller Treasury Services, Inc. Analytics | 11 of April
The yield differential is not the only FX determinant, but it’s a big factor. The US yield is dropping by more than the German yield, and we can suspect that the German yield is influenced by flows out of French paper—and can explode upwards once those elections are over.
07 April, 2017 15:00
Rockefeller Treasury Services, Inc. Analytics | 7 of April
When the payrolls number is released this morning at 8:30 am ET, we will have the expectations vs. the actual issue, but with two sets of expectations. We also get the usual second thoughts over the details—chiefly the participation rate and average wages. At a guess, discussion of this critical indicator will be cut short by talk about the US airstrike against Syria, which has more questions than answers so far.
05 April, 2017 16:00
Rockefeller Treasury Services, Inc. Analytics | 5 of April
The FX market continues to tread water, in large part on data coming in lower than expected (PMI’s, auto sales) but the June rate hike still seemingly on the table. The CME FedWatch tool gives the June hike a probability of 58.9%, the same as the day before. And yet the bond gang is not on board. The 10-year yield low yesterday was 2.316%, the lowest in over a month (Feb 27).
04 April, 2017 16:00
Rockefeller Treasury Services, Inc. Analytics | 4 of April
If the dollar were simply following the 10-year yield, it would be falling. But it’s not. It’s following the 10-year yield differential, and the Bund is falling by more than the note. But the two PMI’s yesterday were both pretty grim and generate an aura of gloom. The dollar may be on borrowed time.
03 April, 2017 16:00
Rockefeller Treasury Services, Inc. Analytics | 3 of April
The WSJ last week featured a story on “soft” data (consumer sentiment) vs. “hard” data (PMI) and asserts it’s the NY Fed’s weighting of soft data that gets it to 3% in Q1 GDP, while the Atlanta Fed likes the hard stuff and gets only 0.9%, A recent WSJ survey gets 1.9% with a high end of 3.6%.