Market Structure Notes — Helmholtz Watson A quiet regime shift with major trading implications TL;DR The Pause That Wasn’t April’s central bank meetings delivered a familiar message. The Federal Reserve, European Central Bank, Bank of England, Bank of Canada, and Bank of Japan all leaned on the same script: uncertainty around energy prices, sticky inflation, and a data-dependent path forward. Policy rates were largely unchanged. If you only listened to central banks, you’d think markets were on hold. Across developed … Continue reading “Why Bond Yields Keep Rising Even as Central Banks Pause”
Understanding Carry Trade Risk, a BOJ Yen Case Study
When markets get all one way, over leveraged and participants drinking the same cool aid any quiver against the grain can quickly become a shake. Essentially the carry trade is funding an investment from a cheaper source, in this case the Yen with negative interest rates and buying an asset with positive returns. The deeper and longer the carry trade goes on the natural motives of risk and greed entwine and when it goes wrong is amplified in low liquidity … Continue reading “Understanding Carry Trade Risk, a BOJ Yen Case Study”
Focus on Powell, Fed Loan Survey and RBA Interest Rate
The week was surprised by a more hawkish Federal Reserve chair this week over rate guidance and QT parameters though it barely reduced punts for rate cuts at future meetings. We get more from the Fed this week with a Powell 60 minutes interview and the Fed’s loan survey to inform on credit tightening. Also ahead is ECB inflation expectations and monetary policy decisions from Banxico, Peru, RBA, Poland. India and Thailand. There were no surprises last week from the … Continue reading “Focus on Powell, Fed Loan Survey and RBA Interest Rate”
Central Bank Watch – Week Ahead Focus Fed, BOE, Riksbank Amid Irrational Exuberance
The coming week brings out meetings with the Federal Reserve mulling over rate guidance and QT parameters. Nothing is expected from that statement-only outcome and markets have reduced punts for rate cuts at the March 20th and May 1st meetings. We also have the Bank of England, Riksbank, Hungary and several LatAm central banks, Brazil, Chile and Columbia. They are confronted by a new round of developments such as the shipping crisis in the Middle East that injects further uncertainty … Continue reading “Central Bank Watch – Week Ahead Focus Fed, BOE, Riksbank Amid Irrational Exuberance”
Bank of Japan Maintains Status Quo, Core Inflation Forecasts Trimmed
The Bank of Japan at its January monetary policy meeting maintained existing policy as widely expected. The BoJ kept unchanged its -0.1% target for short-term interest rates, and 0% for the 10-year government bond yield unanimously. Previously the BoJ adjusted the settings by shifting the hard ceiling from 0.50% to 1.00% in the yield curve control band of +/- 0.50%. No change to core-core inflation forecasts, but core inflation forecasts were trimmed. Bank of Japan Governor Ueda’s press conference dis … Continue reading “Bank of Japan Maintains Status Quo, Core Inflation Forecasts Trimmed”
Central Bank Watch – Week Ahead Focus BoJ, BoC, Norges, Turkey and ECB
It’s been a quiet start to the year for central bankers, the coming week brings them out confronted by a new round of developments such as the shipping crisis in the Middle East that injects further uncertainty into their plans. We have decisions from Bank of Japan (Tuesday), Bank of Canada, Bank Negara Malaysia (Wednesday), Norges Bank, South African Reserve Bank, Central Bank of Turkey and the European Central Bank (Thursday). Then we have the January 31st FOMC meeting and … Continue reading “Central Bank Watch – Week Ahead Focus BoJ, BoC, Norges, Turkey and ECB”
Central Bank Watch – Week Ahead Focus China, Lagarde, Indonesia and Biege Book
Quiet start to the year for central bankers, National Bank of Poland, Central Reserve Bank of Peru and Bank of Korea decisions all as expected. We did get a hotter CPI print before the January 31st FOMC meeting and with those expectations for the Fed’s preferred PCE measure of inflation on January 26th. Nothing is expected from that statement-only outcome and markets have reduced punts for rate cuts at the March 20th and May 1st meetings. Ahead this week we … Continue reading “Central Bank Watch – Week Ahead Focus China, Lagarde, Indonesia and Biege Book”
Central Bank Watch – Week Ahead Focus on Final CPI Before January 31st FOMC
No surprise with the FOMC minutes as expected though they did the expand rate cut dialogue to remind it isn’t over yet for ates, possibly. For the Fed Thursday brings the final CPI print before the January 31st FOMC meeting and with those expectations for the Fed’s preferred PCE measure of inflation on January 26th. Nothing is expected from that statement-only outcome and markets have reduced punts for rate cuts at the March 20th and May 1st meetings. We also … Continue reading “Central Bank Watch – Week Ahead Focus on Final CPI Before January 31st FOMC”
Central Bank Watch – Week Ahead Focus on Fed Minutes Looking for Clues on Rate Cuts
With the Christmas and New Year’s holidays it’s a very quiet time for Central Banks with no surprises from the BoJ Summary of Opinions and Minutes from the Bank of Korea and Reserve Bank of India. In the New Year it all begins again FOMC minutes to expand on rate cut dialogue with memories of last year’s first Fed meeting that started the rise in rates and sell off in equity markets from record highs still fresh. FOMC Member Barkin … Continue reading “Central Bank Watch – Week Ahead Focus on Fed Minutes Looking for Clues on Rate Cuts”
Central Bank Watch – Week Ahead Focus on BoJ, BoK and RBI Minutes and Opinions
A predictable past week of central bank action, Japan’s BoJ, Columbia’s BanRep, Banco Central de Chile, Hungary’s Central Bank, Bank Indonesia and Central Bank of Turkey all pretty much went to plan. We had big macro numbers that also stayed around consensus including US core PCE, UK core CPI, Japan’s CPI post-BoJ, NZ to issue a mid-year fiscal update and Canadian core CPI. With the Christmas Holidays it’s a very quiet time for Central Banks with just the BoJ Summary … Continue reading “Central Bank Watch – Week Ahead Focus on BoJ, BoK and RBI Minutes and Opinions”