Divergence returns

6 November, 2015

The start of the year was all about policy divergence and if this week is anything to go by, then we are ending the year with the same tone. The Bank of England Inflation Report yesterday saw inflation projections revised lower, pushing back expectations for a rate to the early part of 2017. At the same time, we have the jobs data today in the US which is being hailed as the most important jobs release since… the previous most important one. Recall that it was the soft reading on the headline reading last month (142k gain) that served to scupper expectations of an October tightening from the Fed, which is why this is perceived as the make or break release. On balance, the market pricing is towards a tightening in December, but just under 60% probability, which brings considerable scope for volatility should this release fall short of or exceed expectations. Expectations are for a 185k gain on the headline number, with the unemployment rate falling to 5.0%, from 5.1%. Clearly it’s going to take another number notably weaker than expected to shift expectations away from December. And on top of all this, we have the ECB keeping the market on its toes for early December.

What matters though is actual moves in rates. We were seeing a lot of those early in the year, what we are seeing now is largely changing expectations and in the case of the ECB, more unconventional measures. So we may be heading for multi figure moves on FX as a result. It’s all about context.


Source link  
Market shows demand for yielding assets

The market shows demand for yielding assets, which in turn supports demand for the stocks and currencies of emerging markets. The main...

Yuan and Dollar as a weapon in trade wars

The US Nonfarm Payrolls on Friday could even be called boring: the report showed the preservation of a completely healthy labour market...

Disappointment with Fed and tariffs

Trump announced 10% tariffs on Chinese goods worth $300 billion since September 1, thus ending the US-China trade truce after disappointingly...


Fed pushes down stocks

Markets have started the week under pressure. Expectations that the Federal Reserve will cut interest rates by 50 points in July collapsed...

Gold updates new 6-years highs

Gold benefits from a combination of two factors: lower interest rates in debt markets and continuing hopes that the global economy...

Markets recede from the recent highs

A strong Nonfarm Payrolls caused pressure on the stock markets, reducing the chances of the interest rates lowering by the Fed in the upcoming months...


Gold resumes rally, pushing past $1400

Gold prices resumed a push higher on Monday, as flows into the precious metal continued on improved prospects for easier monetary policy from...

Gold rises as markets slip

Market caution continues to support gold. Quotes of this metal rose to $1337, repeatedly trying to push above this year highs at the 1340-1360 area...

Trump says Brexit should happen

President Donald Trump promised the U.K. a "phenomenal trade deal" Tuesday, on the second day of his state visit to Britain...

  


Share it on:   or