Another week of uncertainty in the seemingly crumbling global financial sphere with ongoing global de-risking and deleveraging. The machinations of Fed week and multiple central bank rate hikes and endless banking news are feeding uncertainty and trepidation. Banking worries reignited Friday particularly with Deutsche Bank and US regional banks under pressure. That led to US dollar and yen buying as safe havens as US 2-year yields hit now post-SVB lows. Fed speakers and EU leaders tempered fears and PMIs reminded … Continue reading “Forex Traders Weekly Outlook – Central Bank Machinations in a De Risking World”
Central Bank Watch – Fed, HKMA, BOE, Norges, BSP, CBC and SNB All Hike Rates Amid Banking Crisis
A hectic week led off by the Fed raising by 25bp. From there the Hong Kong Monetary Authority, Bangko Sentral ng Pilipinas, Norges Bank and Bank of England also all hike rates 25bps. Taiwan raised by 12.5 bps and the Swiss National Bank announced a 50-bps rate hike. Brazil and Turkey Held rates unchanged. Markets were hesitant how the central banks would respond since the implosion of three US banks, Silicon Valley Bank, Signature Bank and Silvergate Capital Corp. There … Continue reading “Central Bank Watch – Fed, HKMA, BOE, Norges, BSP, CBC and SNB All Hike Rates Amid Banking Crisis”
Forex Traders Weekly Outlook – Bond Spreads Ahead of Fed, BoE, SNB & Norges Decisions
The currency market was subject an incredibly intense squeeze engulfed the Treasury market with major global de-risking and deleveraging. Forced risk off flows from the US banking crisis contagion continues. We saw the SNB backstopping Credit Suisse and safe haven buying in the yen force more short covering as yield curve bets blew up. Yen shorts and levered “carry trades” were suddenly at risk. The ECB held firm Thursday with its 50 bps rate increase following Wednesday’s abrupt Euro 2% … Continue reading “Forex Traders Weekly Outlook – Bond Spreads Ahead of Fed, BoE, SNB & Norges Decisions”
Central Bank Watch – Confronting Fed, Bank of England and Swiss National Bank Meetings Ahead
It’s been a week since the implosion of three US banks, Silicon Valley Bank, Signature Bank and Silvergate Capital Corp. From there we saw further selling of Credit Suisse that has never recovered from Archegos and the panic selling and speculative attacks on other US Regional banks. The Federal Reserve has worked in concert with the Treasury and major money center banks to stabilize conditions. The speed of protective measures for the financial system has been impressive but with that … Continue reading “Central Bank Watch – Confronting Fed, Bank of England and Swiss National Bank Meetings Ahead”
Forex Traders Weekly Outlook – Inflation Problem Meets Acute Financial System Fragility
The started with a continuation of the selloff in bonds that started with the stronger than expected data a month ago, specifically in jobs, inflation and services demand. Fed Chair Powel ‘s remarks to the Senate Banking Committee and House Financial Services Committee saw the 2/10 spread going over -100bps. Stocks and commodities sold off and the US dollar rallied. By the weekend we had two bank failures in a week. SVB was the largest failure since Washington Mutual’s September … Continue reading “Forex Traders Weekly Outlook – Inflation Problem Meets Acute Financial System Fragility”
Central Bank Watch – Systemic Risk and The Federal Reserve
It will be a busy week for central bankers and investors alike. Up front is the risk of contagion in the financial sector from the two bank failures, Silicon Valley Bank and Silvergate Capital Corp. We have the backdrop of a more hawkish Fed Chair in the face of escalating systemic risk. How will this affect Fed policy given the massive treasury positions out there and the risk of uninsured funds? Ahead the ECB and the Bank of Indonesia will … Continue reading “Central Bank Watch – Systemic Risk and The Federal Reserve”
Forex Traders Weekly Outlook – Unsettled Waters with Powell and US Jobs Ahead
This week we saw a continuation of the selloff in bonds that started with the stronger than expected data a month ago, specifically in jobs, inflation and services demand. Benchmark US Ten-year Treasury yields traded as high as 4.09% this week, the highest since November 9th. Friday, we saw yields pullback and the US dollar with it, the U.S. Dollar Index declined 0.7% to 104.52 (up 1.0% y-t-d). The US dollar fell against our whole basket, not just the majors. … Continue reading “Forex Traders Weekly Outlook – Unsettled Waters with Powell and US Jobs Ahead”
Central Bank Watch – RBA, BoC, BoJ Rates; Federal Reserve Chair Powell Semi Annual Testimony
Central bankers continued their hawkish tilt for the most part all week. Though Fed’s Bostic gave the stock and bond markets relief when he said he’s firmly in the 25bps camp for rate hike pace (as opposed to 50bps). There were no major Central Bank decisions. The Pakistan Central Bank (SBP) hiked 300bps to 20% saying the IMF required the rate hike to get funding released. Emerging markets are caught in a never-ending loop brought to you by their bankers. … Continue reading “Central Bank Watch – RBA, BoC, BoJ Rates; Federal Reserve Chair Powell Semi Annual Testimony”
Central Bank Watch – Will Hawks Continue to Push Rates Aggressively?
With the markets rattled by inflation concerns as Central bankers continued with the higher for mantra we had the FOMC Meeting minutes without any surprises and speeches by Fed officials. Surprisingly though, St. Louis Fed President Bullard (not an FOMC voter), who is generally more hawkish after the hotter than expected core-PCE Price Index was released, remarked that “it appears that the Fed may be able to disinflate in an orderly manner and achieve a relatively soft landing.” The Reserve … Continue reading “Central Bank Watch – Will Hawks Continue to Push Rates Aggressively?”
Forex Traders Weekly Outlook – Dollar Yen and Treasury Yields Dominate
Focus on forex here remains on the yen since reports the next BoJ is Kazuo Ueda. The Japanese currency traded above 135 to the dollar intraday Friday for the first time since Kuroda loosened YCC on December 20th finishing down 2.1% for the week. We are watching for more significant moves should yen weakness develop and lead to contagion effects on the euro and EM currencies. In other words, is the USD correction completing or is this just a 1-2? … Continue reading “Forex Traders Weekly Outlook – Dollar Yen and Treasury Yields Dominate”