Drivers for the Week Ahead

  • The dollar is likely to build on its recent gains
  • As one of the few high frequency indicators, weekly jobless claims will continue to hold the spotlight; FOMC minutes for the March 15 decision will be released Wednesday
  • US March budget statement will come out Friday; Canada data highlight will be March jobs data Thursday
  • Oil prices are giving back some of their recent gains on reports that Saudi Arabia and Russia remain at odds
  • Germany has a heavy data week; UK has its monthly data dump Thursday; after a nice break from Brexit-related headlines, they’re back and they’re not good
  • Japan has a heavy data week; RBA meets Tuesday and is expected to keep policy unchanged Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM may get a little support from a potential OPEC+ deal to limit oil.  Even if a deal is struck, the impact is likely to be fleeting as the global growth outlook remains terrible.  We remain negative on EM for the time being. Continue reading “EM Preview for the Week Ahead”

Drivers for the Week Ahead

  • Markets continue to digest the implications of the Fed’s bazooka moment last week
  • The data highlight this week will be March jobs data Friday; key manufacturing sector data will come out earlier in the week
  • On Friday, BOC delivered an emergency 50 bp rate cut to 0.25% and started QE
  • Final eurozone and UK PMI readings for March will be reported; late Friday, Fitch cut UK’s rating by a notch to AA- with negative outlook
  • Japan has a fairly busy data week; RBA minutes will be released Wednesday Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM went along for the ride last week as risk sentiment got a huge boost from the Fed’s QE and the passage of the US Senate-led stimulus bill.  This week, improved China PMI readings for March may help the risk rally extend for a bit.  Yet the economic toll will still be large as more and more countries go into lockdown.  When the scope of the downturn becomes better known, we believe risk sentiment will worsen.  Continue reading “EM Preview for the Week Ahead”

ECB Approaching its Bazooka Moment

The ECB appears to be moving closer to activating Outright Monetary Transactions (OMT).  Despite being part of Draghi’s “whatever it takes” moment, OMT has never been used.  If the Fed’s open-ended QE is seen as dollar-negative, then OMT should be seen as euro-negative. Continue reading “ECB Approaching its Bazooka Moment”

To Infinity (and Beyond)

The Fed announced Quantitative Easing (QE) will now be open-ended and expanded the range of securities it will buy.  With these new measures, the Powell Fed will boldly go where no Fed has gone before.  Below are our reflections on the measures and what lies ahead. Continue reading “To Infinity (and Beyond)”

Drivers for the Week Ahead

  • Risk sentiment is likely to remain under pressure this week as the impact of the coronavirus continues to spread; demand for dollars remains strong
  • As of this writing, the Senate-led aid bill has stalled; the US economic outlook is getting more dire; Canada is experiencing similar headwinds
  • This is a big data week for the UK; eurozone March flash PMIs will be reported Tuesday; oil prices continue to slide
  • Japan has a heavy data week; RBNZ will start QE; China offers a potential bright spot amongst all the bad news Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM and other risk assets are likely to remain under pressure this week as the impact of the coronavirus continues to spread.  Germany and Italy announced more severe restrictions on gatherings and travel.  Reports that the Republican Senate-led aid bill has stalled due to Democratic resistance hasn’t helped matters, nor have increasingly dire estimates of the potential Q2 contraction for the US. Continue reading “EM Preview for the Week Ahead”

Drivers for the Week Ahead

  • US policymakers are acting more aggressively; yet as we have seen time and again, added stimulus has had little lasting impact on markets
  • The Fed delivered another emergency rate cut Sunday evening local time; the major central banks announced coordination action to ease dollar funding stresses
  • BOC delivered an emergency 50 bp cut to 0.75% late Friday
  • Eurozone Finance Ministers meet Monday to discuss support measures for the economy
  • SNB meets Thursday and is expected to keep rates steady at -0.75%; BOJ has brought forward its meeting from Thursday to today
  • RBNZ delivered an emergency 75 bp cut to 0.25% early Monday local time Continue reading “Drivers for the Week Ahead”