Category: Economic Conditions

Still Looking, but not Finding, the Game-Changing Data


The US dollar continues to consolidate its recent strong gains. Its pullback is shallow is corrective in nature. Nothing has materialized to challenge the divergence meme. The US 2-year premium over Germany has edged higher still today. It is a little more than 122 bp and it is extending its widening streak to the eighth consecutive session. Although the 10-year premium over Japan has not increased for two days, it is holding above 200 bp, a threshold it moved above at the end of last week for the first time since September 2014.

Some Recent Economic Developments to Ponder


The Swiss National Bank increased its ownership of US equities by about $350 mln in Q3 to $38.95 bln.  The SNB has a stake in some 2500 listed US companies.  The Russell 2000 was marginally lower in the quarter.  The SNB indicated that it increased its Apple stake to 10.3 mln shares from 9.4 mln in June.  It increased its exposure to ExxonMobil by roughly the same percentage (~10%) and increased its Microsoft stake by a little less (~9%).  Overall, the SNB, often regarded as a conservative central bank, has about 18% of its assets (~$546 bln) in equities. 

Economic Data Effects Diminished by Central Bank Focus


The US dollar continues to consolidate after last week’s gains amid greater confidence that the Federal Reserve will likely raise rates next month.  Similarly, after a steep sell-off, major bond markets are recovering today, partly in the face of a push lower in stocks.  The US markets gave back 1% yesterday, and global equities are lower. 

Developments in Asia and Europe Shift Investor Attention Overseas


The sharp US dollar rally in response to the unequivocally strong jobs data left short-term technical indicators a bit over-extended and the consolidative tone now is not unexpected.  The dollar’s pullback is minor, and it did manage to extend its gains against the yen.  It has pushed a little through the JPY123.50 high set on August 21 just before the August 24 collapse to almost JPY116.00.

The Broader Message Conveyed by a Stronger U.S.


The combination of the unequivocally strong US jobs report and the contrasting unexpected decline in German factory orders and industrial production reported last week sets the broad investment framework for the period ahead.

It’s All about Jobs, at Least for Today


The US dollar is going into the monthly jobs report bid.  It has risen against all the major currencies, save the Australian dollar that is up less than a tenth of one percent at pixel time. There are two main considerations. First, many speculators had given up on the strong dollar story.  This was evident in the positioning in the futures market, and the numerous articles in the business press arguing the dollar bull market was over.  

Manufacturing Rout as U.S. Factory Orders Weaken


Fewer buyers are interested in American-made goods even as factories find it more expensive to hire workers.

Factory goods saw declining demand, with new orders down 1% in September after falling 2.1% in August, according to the Commerce Department. That August decline is after a downward revision as analysts saw orders even weaker than previously estimated.

Fed Speakers and an Employment Estimate Liven Things Up


Wednesday may begin slowly in Asia featuring the largest IPO of the year in the form of Japan Post, but it may very well prove to be one of the most important days of the month. Caixin’s service and composite PMIs for China are due. 

Investors Look to the End of Week U.S. Jobs Report


The US dollar recorded mixed performance last week.  Consolidative technical pressure, after it spurted higher at the end of the previous week with the help of a dovish ECB and rate cuts by the PBOC, and month-end pressures dominated.  There was some disappointment that the BOJ did not ease, helping send the yen higher before the weekend. Heightened expectations for an RBA rate cut in the week ahead weighed on the Australian dollar. The euro itself was virtually unchanged on the week and off 1.5% on the month. 

Mobilizing Against Austerity? Grab Your Smartphone


Protests against austerity continue to roil parts of Europe, most recently in Brussels earlier this month when 100,000 people took to the streets and police deployed water cannons.