Weekly Report
Abrupt Trade War Escalation Overshadowed Fed’s Cut, Yen and Franc Jumped
The abrupt escalation of US-China trade war overshadowed Fed's rate cut last week. As the trade talks in Shanghai yielded no constructive result, Trump announced to impose 10% on USD 300B in Chinese imports, effective September 1. The list include practically all untaxed Chinese goods, which should have much...
Sterling Might Bottom While Euro Would Stay Pressured, Dollar Indecisive
Sterling, Dollar and Euro were the major focuses last week as they took turn in suffering selloffs. The Pound was pressured by increasing worries over no-deal Brexit. While it ended the week as the weakest one, late recovery argues that the worst could be past for Sterling for the...
Dollar Reversed, Stocks Made New Records on as Fed Cut Expectations Solidified
Dollar's fortune reversed again last week as expectations of Fed July rate cut re-intensified. Such expectations also pushed US equities to new record highs. However, global equities lagged behind, with major FTSE, CAC and Nikkei closed inside prior week's range. DAX even dropped sharply. Also, 10-year and 30-year US...
Focus Turn to US Data after Trump & Xi Delivered at G20
Expectations setting were rather well set for the highly anticipated Trump-Xi meeting at G20. Both sides agreed to stop raising tariffs further. But it's unsure whether they've closed the huge gap that led to collapse in trade negotiations. If the causes remain, the results would be the same no...
Fed & ECB Turned Dovish, But It’s Too Early to Confirm July Policy Actions
Major global central bankers sang a chorus of dovishness last week. Most importantly, both ECB and Fed signaled the possibility of rate cuts ahead. Comparatively, RBA's indication of more rate cut was not much a surprise. In the background, it appeared US and China were back on track to...
Dollar Rebounded Strongly as Focus Turns to FOMC Meeting
Dollar ended as the strongest one last week as economic data from the US affirmed that Fed is in no rush to deliver the "insurance" rate cut this month, that is, on June 19. Yen was the second strongest as US and German treasury yields stays pressured. Canadian Dollar...
Dollar in Steep Decline… Before Trump Drops Mexico Tariffs
Dollar weakness was the main theme over the whole week. It started with worries over Trump's tariff threats to Mexico. Then Fed officials came out acknowledging the risks from Trump's tariff policies and signaled their openness to rate cuts should trade tensions worsen. Selling reached its peak after poor...
Sentiment Sank on Trump’s Political Weaponization of Tariffs
Free fall in major government yields extended, and accelerated last week. Meanwhile, it seemed that stocks investors finally woke up with sharply deteriorating sentiments. Major indices staged steep decline as risk aversion heightened. The first factor being the "ever-present" US-China trade tensions. Hard-line rhetorics from official media blossomed after...
Treasury Yield in Free Fall, But the Worst in the Markets are Yet to Come
Sterling was the weakest one last week as it suffered persistent selloff ahead of UK Prime Minister Theresa May's announcement on resignation. The Pound has indeed stabilized since then after the speculation was realized. Without May, the Brexit path ahead becomes even more uncertain. The key lies on who...
CHF, USD & JPY Surged on Deals, Sterling Plummeted
Deal, deal, deals. They're the main themes in the markets last week. The cross-party Brexit talks in UK collapsed and a high profile Brexiteer is tipped to lead the Brexit process after current Prime Minister steps down. Tensions between US and China escalated further. A trade deal is now...
US-China Trade War Escalated, No End in Sight as Principle Differences Remain
US-China trade war was the center of global focus last week. Markets were expecting a deal with Chinese Vice Premier Liu He visited Washington Instead Trump announced to escalate to full-blown level after China reneged on its commitments during the negotiations. Trump's decision was understandable even though it may...
Sterling Surged as UK Politicians Could Finally Drop Differences to Deliver Brexit
Sterling was the star winner last week as boosted by renewed hope of a Brexit deal between the government and opposition. Poor results for both Conservatives and Labours are piling pressure on both parties to end the Brexit standoff and drama as soon as possible. In short, Conservatives lost...
Worsening Inflation, Dovish Central Banks and Falling Treasury Yields
Yen and Dollar were the biggest winners last week on worsening inflation outlook, dovish central banks and falling treasury yields. Australian Dollar was the weakest one as CPI just rose 1.3% yoy in Q1 versus expectation of 1.5% yoy. The added heavy weight to the case of RBA rate...
Yields Surged, Yen Tumbled on Receding Global Risks
The financial markets were generally dominated by positive sentiments last week. Major global economic risks seemed to be receding generally, even though some uncertainties remain. The development was best seen in the strong rally in treasury yields. US 10-year yield closed the week up 0.059 at 2.56, above 2.554...
Fundamentals Improved But Uncertainties Remain, Forex Markets Isolated From Optimism Elsewhere
After a strong Q1, risk appetite extended into the first week of Q2. The most notable improvements were seen in the bond markets, as German 10-year yield turned positive again. US 10-year yield also reclaimed 2.5 handle. However, stocks and 10-year yield are both near to key resistance zone....
Risk Aversion to Come Back in Q2 as Stocks and Yields Recouple
Intensifying recession fear was the main theme in the markets in March, alongside never-ending Brexit and trade tensions. With downside risks to growth starting to materialize, major global central banks started their dovish turns. Most notably, Fed now forecasts no rate hike this year. ECB will keep interest rates...
Sentiments Turned Very Fragile as Recession Fears Intensified
After the much more dovish than expected Fed economic projections and shockingly poor Eurozone manufacturing data, it looks like major world economies are at the brink recessions. German 10-year bund yield turned negative for the first time since 2016, and it was as high as 0.12 during the week....
With No Clarity on Brexit and Trade War Yet, Focus Will Turn to FOMC Projections
Sterling ended last week as the strongest one as no-deal Brexit is now politically ruled out. But it should be noted that the path forward remains unclear, as least for a few more days. Thus, the upside breakout of Sterling was indecisive. The Pound has indeed closed below recent...
Sentiments Turned Sour on Slowdown Worries, But No Panic Button Hit Yet
Looking through all the financial market news last week, the message was rather unified. That is, 2019 will be a year of slowdown, globally. Economic data, central banks, governments and independent organizations are all reinforcing this message. While ECB's "pre-emptive" dovish turn triggered wild market reactions, it was just...
Treasury Yield Surged on Abating Global Risks and Bets on Bottoming in Economic Slowdown
There were so many high profile events last week. In the end, the positive ones were more than enough to offset the negative ones. US-China trade truce was extended indefinitely and it looks closer than ever to have deal. MSCI's increase of weighting of Chinese stocks gave China another...