Drivers for the Week Ahead

  • Higher US rates continue to support the greenback
  • With a heavy data week, the most important reading will be US retail sales Friday
  • This is also a big week for UK data; Japan has a fairly heavy data week too
  • RBNZ meets Wednesday and is expected to cut rates 25 bp to 0.75%; Australia reports October jobs data Thursday Continue reading “Drivers for the Week Ahead”

Drivers for the Week Ahead

  • There are no major US data releases this week, which means that the dollar is likely to remain on its back foot
  • US-China trade talks are progressing
  • The US economy remains solid; Canada has a heavy data week; eurozone reports final PMIs for October
  • The Brexit Plot thickens; UK PMI readings continue; BOE meets Thursday
  • Japan has a light data week; RBA meets Tuesday Continue reading “Drivers for the Week Ahead”

FOMC Preview

The FOMC begins a two-day meeting today with the decision due out tomorrow afternoon.  The Fed is widely expected to cut rates 25 bp for the third meeting in a row.  What’s next? Continue reading “FOMC Preview”

Drivers for the Week Ahead

  • This will be one of the more eventful weeks for global markets
  • The FOMC decision Wednesday will be the highlight of the week
  • The US has a full data week, concluding with the October jobs report Friday
  • Brexit is the other big unknown this week Continue reading “Drivers for the Week Ahead”

A New Stage of the US-China Conflict

The US-China diplomatic relationship may be entering a new stage. The balance of power between the key players – Trump, China, the US Congress, and the Democrats – is changing and their roles are being reshuffled. This might be enough to break the endless cycle of agreements and re-escalations. In short, we think both Trump and Chinese officials have a greater incentive to reach a deal (or at least not to escalate) this time around. Continue reading “A New Stage of the US-China Conflict”

Drivers for the Week Ahead

  • We are beginning to become more constructive on EM
  • The Brexit situation remains fluid but it appears that our base case of another delay is coming to fruition
  • The US economic outlook still remains solid; Canada holds national elections Monday
  • ECB, Norges Bank, and Riksbank meet Thursday and are expected to stand pat: Turkey meets Thursday and is expected to cut rates
  • Bank Indonesia meets Thursday and is expected to cut rates 25 bp to 5.0% Continue reading “Drivers for the Week Ahead”

What is the US Yield Curve Telling Us?

The US yield curve has turned positive again. Did we dodge a bullet? Markets are likely to remain on US recession watch, but we look at past curve inversions to conclude that we may avoid recession in 2020. Other clues support this view, at least for now. Continue reading “What is the US Yield Curve Telling Us?”

Drivers for the Week Ahead

  • With risk-on sentiment still in full force, we acknowledge that the dollar may remain under pressure near-term
  • Recent developments take some pressure off the Fed to cut rates again this month, which is ultimately dollar-positive
  • US data highlight this week will be September retail sales Wednesday
  • UK Parliament reconvenes Monday; EU summit October 17-18 is seen as the last opportunity to submit workable Brexit deal
  • China September data deluge comes this week; MAS and BOK meet and both are expected to ease Continue reading “Drivers for the Week Ahead”

Some Thoughts on a Possible US-China Currency Pact

There has been increased talk about a possible “currency pact” from China as a key component for a partial trade deal. The notion was first discussed in February, when Treasury Secretary Mnuchin touted that the US and China had agreed on a currency pact that was “the strongest ever.” No details were ever divulged, as US-China talks broke down in May over the deeper structural reforms that China was unwilling to commit to. So what can we expect of a trade pact this time around? Continue reading “Some Thoughts on a Possible US-China Currency Pact”