RSS feedus
’Why QT, not QE, is the risk
A plan for a plan is not a plan, says HSBC on Friday.
And this is the reason why QT is the risk now, not QE.
Quick explainer: QT is what HSBC’s senior FX strategist Daniel Hui et al are calling quantitative tightening — a.k.a.
Go on, Treasury: buy dollars
What’s the best way for the US to show commitment to avoiding currency belligerence after pledging its faith at the latest G20 summit?
Answer, courtesy of BNY Mellon’s FX strategist Neil Mellor: it should buy dollars — and help weaken the yen.
A rumour of (currency) war
Never mind asset prices — looks like QE even has the power to distort good old market rumour mills.
Here’s the gist of a certain Chinese whisper going round various research desks, brokers and hedge fund managers on Thursday:
Currency wars – ‘The crisis is upon us’
We’ve already commented on the rampant descent of the dollar on Thursday.
But here’s a scarily convincing argument from Marc Ostwald at Monument Securities about what all these QE-related currency war shenanigans could really be indicating.
A yen for history
‘I can’t go on. I’ll go on’. That would appear to be the Bank of Japan’s Beckettian motto, as the yen hit a 1995 high against the dollar with no intervention in sight on Thursday (chart via Reuters):
We’re well under September’s Y82 intervention level now.
Behold, Google’s view on inflation
It was bound to happen.
According to the FT, Google is mid-way through the process of creating its very own consumer price index — based (understandably) on its ability to access real-time price data from across the web.
Front-running the Fed
US bond markets are shut for Columbus Day — which means it’s the perfect time to stop and take stock of recent US Treasury yields. Two- and five-year notes both touched record lows last Friday after those dismal non-farm payroll numbers:
Non-farm payrolls: it’s the public sector, stupid?
Marc Ostwald of Monument Securities provides an interesting interpretation of Friday’s much weaker than expected non-farm payroll figures.
In a nutshell, he believes it says more about the state of the US public sector than the private one (our emphasis):
A distorted US 10-year swap spread?
Spotted — a(nother) potential sign of QE distortion in the market:
BNP Paribas observes on Friday that the US 10-year swap spread — the difference between the swap rate on a contract and the yield on a government bond — has moved sharply out recently,
US non-farm payrolls – down by 95,000
US non-farm payrolls fell by 95,000 jobs in September while the unemployment rate stayed at 9.6 per cent, according to the Bureau of Labor Statistics.
The decline was much more than expected by the market.
Guess the US jobs number
Competition time!
Guess the jobless number from Friday’s US non-farm payrolls report.
The winner will receive a special (yet to be determined) FT Alphaville prize.
The data will be released at 1.30pm (BST) and remember,
Irony alert: China cries fowl
Minyanville has picked up on the irony of the month, following Monday’s news that China, which was the largest importer of US chicken in 2009 ($752.2m), will impose new ‘anti-dumping’ duties on chicken parts and whole birds,
So QE-asy it hurts
Gold glittering past a nominal record high:
The dollar sinking to a five-month low against the yen:
And even the euro is getting used to life at $1.35.
Clearly, Tuesday’s insider-y WSJ article on the Fed and QE2 has made waves.
An intriguing pick-up in Treasury settlement fails
Some curious developments in the US Treasury market to report.
First, there’s been a relatively strong burst of settlement failures in the US Treasury repo market in the last week.
According to data compiled the New York Fed,
The Fed cometh like a thief in the night
It’s increasingly not if, but when, as far the market is concerned over the Federal Reserve’s most recent pronouncements on reviving quantitative easing.
But when is when? And what might answering that tell us about inflation?
Morgan Stanley’s monetary analysts — long-time inflation contrarians — had a helpful if cautious guide to the first question on Thursday:
Goldbugging con’t…
Breakfast with Dave (Rosenberg, of Gluskin Sheff) on Wednesday included this remarkable, self-explanatory chart:
As we noted in early September, with inflation expectations low it isn’t just the inflationistas buying up gold,
Keep your credit, buy our stuff
We’ve written before about the difficulty of knowing whether the decline in small business lending is a problem of supply or demand.
The answer matters not just to the health of small businesses, but for knowing whether the Fed’s easing measures have been successful in circulating credit throughout the economy.
And you thought we were bearish
How best to summarise this long, depressing outlook on the global economy by Nouriel Roubini and Ian Bremmer? We’ll give it a shot.
First, no matter who you are, you are too optimistic:
However, as we all know from human experience,
Kill the old, deflation edition
Morgan Stanley economists always have such interestingly contrarian views on the inflation-deflation debate. For example – Joachim Fels’ unfashionably inflationista analysis of central bank credibility.
US non-farm payrolls – down 54,000
US non-farm payrolls fell by 54,000 jobs in August while the unemployment rate remained constant at 9.6 per cent, according to The Bureau of Labor Statistics.
The decline was much less than expected by the market.
CMBS delinquencies climb again, but not by much
It seems the news continues to be better for CMBS than for commercial real estate as a whole.
Standard & Poor’s has released its monthly CMBS snapshot for July, and the top line is that the pace of increase in the delinquency rate has nearly flattened:
US Q2 house warming (or should that be warning)
Yes, house prices in the US climbed in the second quarter of the year. No, that’s not cause for optimism or even relief.
First the announcement from S&P (emphasis ours):
Data through June 2010,
James Montier on the bond bubble
GMO’s James Montier has added his two-penneth to the bond bubble debate.
He reckons it is a largely sterile conversation because what investors should be asking themselves is whether bonds are a good investment at their current low levels.
US Q2 GDP revised to 1.6 per cent
A beat for Ben.
US second-quarter GDP growth was revised from 2.4 per cent to 1.6 per cent by the Bureau of Economic Analysis on Friday, above a consensus of 1.4 per cent revised growth.
Flashes,
Everyone’s an Albert these days
Accept no imitations.
And this one’s got a nice tinge of I-told-you-so about it. The title of the latest missive from SocGen perma-bear Albert Edwards:
They laughed. Oh how they laughed.
Albert — who has been warning about massive global deflation since,
US housing: bad to worse, then worse again
We said on Monday to expect more bad news from the US housing market, but we didn’t know it would get so bad so quickly.
Following Tuesday’s awful existing home sales numbers, the Census Bureau announced on Wednesday that new homes had sold at an annual rate of 276,000 in July,
Lower — and flatter — for longer
And the bond band played on. Wednesday’s instalment — the US yield curve flattening below 200 bps between the 2-year and 10-year:
That’s for the first time since April 2009, as Reuters notes.
Perhaps outdone,
Germany’s defaulted gold bearer bond
Err, shouldn’t the fact that Germany is potentially facing a multi-billion dollar lawsuit for defaulted hyperinflation-era gold bearer bonds be triggering more news flow than just this Bloomberg story?
Germany must face a lawsuit over bonds that defaulted under Adolf Hitler in the 1930s,