Chartbook: March 14
Slides from this week’s internal trading call:
CNY
Hope Springs
Markets are staging a cautious recovery after a three-day bout of selling drove equity indices into the red and triggered some of the biggest daily interest rate declines on record. US regional bank stocks appear destined for a more constructive open, with yesterday’s indiscriminate selling giving way to a more nuanced pickup in well-capitalized names. Treasury yields are climbing off the floor, and the dollar is rising against most its major counterparts. But damage has been done. Rate expectations have been reset lower across the global economy, financial conditions have tightened sharply, and the episode has likely inflicted a psychological...
Pre-Powell Caution Fades
The dollar is back on the defensive, yields are slipping, and equity futures are climbing as market participants bet that risks associated with today’s Federal Reserve Congressional testimony are largely priced in. Commodity-linked currencies are up slightly in a modest reversal from yesterday’s China-related selloff, while safe havens like the yen and Swiss franc are seeing softer demand. The Reserve Bank of Australia raised its cash rate for a tenth consecutive time, but dropped a reference to further increases, hinting only that “further tightening” would be needed. Australian rates have climbed a cumulative 350 basis points since last May, and...
Chartbook: March 6
Slides from this week’s internal trading call:
Currencies Stabilize As Pivotal Week Begins
Investors are bracing for a momentous week, with Jerome Powell’s Congressional testimony, three major central bank meetings, and the February non-farm payrolls report combining to set the stage for erratic price action in currency markets. The dollar is climbing, yields are ticking lower, and the euro and pound are tightly rangebound. Commodity-linked currencies sold off over the weekend as China’s leadership unveiled a more cautious growth agenda than had been expected. Work documents released during the National Party Congress outlined plans to increase state outlays and expand the budget deficit, but Beijing set its headline gross domestic product target at...