Possible Brexit Scenarios

UK Parliament is scheduled to hold its Brexit vote tomorrow. The outcome is expected sometime between 7-10 PM London time, and is likely to result in a rejection of May’s plan. What’s unclear is what happens next. Here, we try to put together some possible scenarios. For the most part, the scenarios would seem to favor UK assets for anything other than a no-deal Brexit.

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Uridashi Issuance in 2018

In 2018, foreign currency Uridashi issuance totaled $9.0 bln. This represents a slight increase from $8.5 bln in 2017 but falls short of the $12 bln issued in 2016. Continue reading “Uridashi Issuance in 2018”

A Look Back at Late 2018 and a Look Ahead to Early 2019

We wanted to alert our readers to recent market events that might have been overlooked due to the holidays. Furthermore, we offer some brief thoughts on 2019, many of which will be fleshed out further in our upcoming FX Quarterly for Q1 2019.

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FOMC Preview

The FOMC meets Wednesday and is widely expected to hike rates 25 bp. Markets will be more interested in what the Fed sees for 2019 and 2020. In that regard, it is quite possible that the Dot Plots tilt slightly more dovish, but we do not think the FOMC statement will veer much from recent Fed communication.

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France to Underperform as Downgrade Risk Rises

French President Macron has backtracked in the face of increasingly violent protests against his policies. While this may provide a temporary calm, we believe France will remain under pressure as protests continue and the macro backdrop worsens.

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Some Thoughts on US Yield Curve Inversion

A portion of the US yield curve has inverted. While this is not the typical inversion that presages a recession, markets are nevertheless on heightened alert. This piece will discuss the predictive power of an inverted yield curve as well as why we are not yet concerned that one will materialize.

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Some More Thoughts on the Fed’s Neutral Rate

Fed Chairman Powell roiled global markets yesterday in his speech before the New York Economic Club. Upon further consideration, markets may want to rethink the knee-jerk reaction. This piece explains why.

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Where Do We Stand With Regards to the Dollar Rally?

We think that the market is overreacting to two Fed speeches and underreacting to ongoing firmness in the US data. Yes, the US economy is slowing but nothing beyond what was within expectations. Growth, while slowing from the blistering 4.2% SAAR pace in Q2, is still robust.

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Thoughts on the US Elections and Economic Outlook

The mid-term elections in the US are widely regarded as a referendum on President Trump’s first two years in office. While markets have largely priced in a benign outcome, we outline below the tail risks and what they mean for the US economy and global financial markets.

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