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’Some more standard deviations in commodities
Sean Corrigan at Diapason Commodities sends us this chart on Friday:
It shows the value of London Metal Exchange Lead inventories over two decades.
As Corrigan notes, the more visible inventory there is,
Deutsche chimes in on the commodities rout – it’s the QEnding
Still pondering possible reasons behind the recent commodities rout?
Deutsche Bank says it’s all because of the coming QEnding, or the end of the Federal Reserve’s second bout of quantitative easing,
Emerging loan demand
If you’ve ever wondered what a survey of senior lending officers in 45 emerging markets might look like (as opposed to, say, all those stagnant developed loan market surveys) here’s your chance.
The Institute of International Finance (IIF) has just released first-quarter data from its (enlarged) emerging markets lending conditions survey,
The dollar-battering Bernanke presser
To quote (again) a pint-sized musical firecracker from Minneapolis, this is what it sounds like when doves cry:
At pixel time the US dollar index was at its lowest point in nearly three years against a basket of currencies.
If you prick a sovereign, why do they not bleed?
You all know we’re absolute suckers for anything with ‘sovereign vulnerability’ stamped all over it. So…
… Presenting Rabobank’s latest Sovereign Vulnerability Index:
Yeah, the US and Japan are pretty prominent.
Snap news
Breaking pre-market news on Thursday,
- Dollar index hits three-year low – Reuters
- Gold at all-time high of $1,508 an ounce for fifth straight session – Reuters.
- SVG Capital posts 11 per cent growth in NAV in first quarter – statement.
Unfunded entitlements loom again
Ignore, for a second, Standard & Poor’s warning of political impasse on the US budget, or its talk of contingent liabilities like student loans and the financial system. That’s all short- to medium-term.
Better the quality collateral you know?
Not even an S&P warning over the state of the US debt pile has been enough to take the shine off US Treasuries.
On Monday, 10-year US yields actually ended up falling (after briefly rising) following the credit rating agency’s announcement:
Don’t bet on Japanese repatriation
There’s been a lot of talk about how repatriation of funds will affect the yen in the weeks and months to come.
Most believe the flow of funds back into Japan will see the yen strengthen. There are,
Cable unwinds
The post budget sell-off continues, leaving cable close to an important support level at $1.5980.
Next stop $1.5750, according to chart watchers.
But does the weakness reflect worries that the
The yen and economic fundamentals
How do we know that foreign funds are being repatriated into Japan? Because the yen strengthened against the dollar after the earthquake and until the G7 intervened. Why did the yen strengthen? Because funds were being repatriated,
International yen rescue [updated]
Updated (10:04 GMT): Spotted sometime around 10pm GMT, the Yen reaching a record high against the dollar: ¥79.30.
The all-time low of ¥79.78 (set in 1995) is now within spitting distance.
So,
From dollar debate to playground insults
Roll up, roll up.
See a Federal Reserve economist call anti-Fed campaigner and congressman Ron Paul a “pinhead” in the course of reviewing Paul’s 2010 book, End the Fed.
Writes the St. Louis Fed’s David Andolfatto:
From inflation to stagflation
Some grumbling from the belly of the US Treasury curve.
US Treasuries had a rollercoaster day on Wednesday as soaring crude sent the 10-year yield lower by 6 basis points. UST gains then reversed within a couple of hours.
It’s midnight in Tokyo
…and that must mean the yen is weakening. Interesting observation from Nomura’s foreign exchange analysts:
The secret behind the yen’s outperformance relative to US rates is likely to be found in Tokyo.
In Pharaoh’s currency markets
Noted at pixel time — direct (and rather impressive) intervention by Egypt’s central bank in the Egyptian pound, just two days after banks reopened:
Not a great sign for capital flows, is it?
What a strong euro hides
Compare and contrast — charts from a UBS investor survey:
But!:
Ubi solitudinem faciunt, pacem appellant, kind of thing.
Mr Hu’s trip to Washington
Some thoughts from emerging market specialist, Ashmore…
… On Chinese president Hu Jintao’s visit to America:
The most important and most tangible aspect of president Hu’s visit to Washington may well be what China thinks the role of the dollar should be going forward.
Eurogeld déjà vu
Euro shorts burned on Thursday — still being roasted on Friday:
It’s a European Financial Stability Facility-inspired short-covering/risk rally — Spanish and Italian sovereign bond spreads against Bunds are at their tightest since early December.
‘Tis the season to watch for carry trading
Here’s something to add to those lists of 2011 investment themes doing the rounds: whether we’ll get a full-blown comeback of the dollar carry trade in the new year.
Controversial, we know.
But here’s how BNY Mellon’s Michael Woolfolk set the scene on Wednesday,
Mucho euro negativity
You have Moody’s to blame for euro volatility this morning:
On Wednesday the euro dropped again after Moody’s put Spain on review for a downgrade. But you can see pressure on the euro in other market corners too (again).
The beast with two backs
We mean the greenback and the redback, naturellement.
USD/CNY will likely be concentrating more than a few minds in 2011, with investors looking for ways to play the reflation trade, and thus, a rebalancing trade,
Blood-stained dollars
Tuesday’s bond bloodbath has really made some people’s day — see Jefferies’ ‘Crash in Treasuries – BUY THE MARKET!’ call, inter alia.
But it’s also causing some head-scratching over the dollar.
The Dollar Index was one of the best performing assets in November,
The ‘Europeseta’ tests psychological resistance
Not quite the lows of the Greek crisis.
But EURUSD is on Tuesday convincingly pushing at the 1.30 resistance level, having penetrated the “psychological” boundary on a number of occasions already:
Time for the Merkel and co.
When quantity may not matter
Interesting graph courtesy of Jeffrey Young at Barclays Capital:
That’s the quantity of liquidity to the value of the US dollar — with the two bearing less relation to each other than you may suppose.
Unpredictable (Korean) geopolitical risk, illustrated
Abrupt fighting over in Korea is not what the market would have wanted right now:
Related link:
North Korea fires on South Korea – live coverage - The Guardian
Sovereign euro leakage
Counterfactual currency calculations are complicated.
Kudos, then, to Jens Nordvig and Charles St-Arnaud, FX analysts at Nomura:
We estimate that the EUR risk premium linked to sovereign risk in the eurozone could account for a 12% decline in the euro since late 2008,
And the Oscar for ‘best supporting C.banker’ goes to…
First, it was Robert Zoellick.
And now former Federal Reserve chairman Alan Greenspan is at it.
Both have been and still are ruffling feathers in the FX market with relatively provocative commentary.