Summary: The Turkish lira suffered an enormous gap lower on the opening of trade this week after Turkish president Erdogan fired the hawkish former central bank chief and replaced him with someone more sympathetic with his own views on interest rate policy and inflation. Lira longs are suffering a brutal case of whiplash after the bigger than expected rate hike...
Summary: A further rise in US yields yesterday, even at the shorter end of the US yield curve, spooked risk sentiment once again, and a mini-crash in crude oil prices has pressured commodity currencies and spoiled the NOK bulls parade in the wake of the Norges Bank meeting. The most interesting development overnight, however, was the potent rally in the Japanese...
Summary: The Fed has made it more than clear that it is not about to touch the policy rate or its pace of QE purchases until US inflation rises and stays high for a sustained period. That dovish message was initially celebrated by the equity market and by USD bears, but a follow-on move higher in US long yields is providing some pushback, especially for risk...
Summary: Equity markets are showing signs of another tantrum as US yields rise steeply again, with the US dollar following the lead from treasury yields. It looks like a potential explosive week ahead, as the FOMC meets on Wednesday and the Bank of Japan is set to announce the results of its policy review on Friday in the wake of a recent remarkable tailspin in...
Summary: US yields stopped rising and the US dollar has largely stopped rising as well. US treasury auctions today and tomorrow are crucial for the next moves in the greenback. Elsewhere, the ECB meeting tomorrow is receiving plenty of attention, which it only should receive if yields elsewhere continue higher, because the ECB is operating without the fiscal...
Summary: As global yields have risen recently, the chief victims among currencies have been the lowest yielders and traditional safe-haven currencies like CHF and JPY, but we are curious to see if continued US dollar strength and weak risk sentiment begin to weigh more heavily on traditional pro-cyclical currencies this week, where the calendar highlights of the...
Summary: The USD rise accelerated steeply yesterday as Fed Chair Powell largely shrugged off the move higher in US treasury yields. And USDJPY went nearly vertical overnight on intervention against rising yields at the long end of the yield curve. The US dollar is now strong across the board and the countdown to the next Fed intervention is underway, but the USD...
Summary: The market is trying to put a brave face on after the treasury market trauma of late last week send shockwaves across asset classes. The hopeful narrative is one that yield-curve control to backstop asset markets is imminent. Already, the ECB is practicing rhetorical pushback against rising yields, and the Australian RBA stepped up long bonds purchases...
Summary: The pressure from rising yields came to at least a near-term climax yesterday with a new spectacular spike in US Treasury yields that spooked global markets and drove a general leveraging across asset classes. In FX, this meant that the strongest trends of late reversed brutally, with JPY and USD soaring and traditional risk-correlated FX and sterling...
Summary: Risk sentiment is broadly under pressure, with muted reactions across FX, although yesterday did produce new developments worth noting, and the event risk of the week is up today in the form of semi-annual testimony from Fed Chair Powell. Any hint from Powell on the Fed stance on rising yields will be closely watched, with even the absence of concern...
Summary: Yields closed at new cycle high on Friday and followed through to a degree in trading to start the week today, likely a key driver in spooking risk sentiment in equities. Commodity related FX has been happy to shrug off the usual sensitive to risk sentiment as some commodity prices are white hot, even if EM currencies seem a bit less than thrilled with...
Summary: The rise in global bond yields this week has buffeted risk sentiment, but a strong buy-the-dip mentality in risky assets seems to prevail, especially this morning in Europe, helping the USD back lower and sending GBPUSD to 1.4000 and AUDUSD to new cycle highs. Can sentiment continue to look through higher yields? That is a knotty question, which I...
Summary: US treasury yields spiked a bit more impressively yesterday as the entire curve from five years on out rose aggressively to new cycle highs. Markets finally responded a bit more broadly to the development even if the USD move higher on the back of this development was rather modest in broad terms. From here, we will watch out for a whiplash-inducing...
Summary: Risky assets remain on fire as the US gets back to work today, with US long yields, easily the most important risk benchmark for global financial markets, having broken to new cycle highs ahead of a three-day weekend in the US and with China out on holiday until later this week. USDJPY has poked higher in sympathy with US yields, likely a coincident...
Summary: Most USD charts have posted a significant bearish reversal pointing to the risk of further USD weakness, driven by poor quality US stimulus and a reflationary narrative in which the Fed and the US government are seen as pursuing an irresponsible level of accommodation. But lurking in the background, long US rates should be making everyone uncomfortable....
Summary: The US dollar peaked out on Friday just ahead of a weak official January jobs report and weakened sharply again yesterday and overnight as US treasury yields rolled over after etching new highs ahead of important treasury auctions tomorrow and Thursday. The JPY responded enthusiastically to lower yields and USDJPY dropped well below 105.00 overnight,...
Summary: The US dollar has supposedly become a pro-cyclical currency, enjoying the strength from strong economic performance and a surge in longer yields, but can we really continue to see a rising US dollar, rising US yields and rising risk sentiment for much longer? The US labour market report later today the next test on that front. Elsewhere, sterling has...
Summary: The Bank of England decision was to the marginally hawkish side of the spectrum of likely outcomes in that no haste for a negative rate policy was mentioned, but neither was the idea entirely eliminated. Sterling relief rally shows strong bid for the currency. Elsewhere, the USD surge continues as the longest US yields rose to new highs for the cycle and...
