Making Sense of Global Capital Markets
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The US Treasury announcement early in North America yesterday that it would at least double the size of liquidity support buyback operations for longer-dated nominal coupon securities. The current maximum size is $16 bln a quarter. The stepped-up purchases will take effect on September 9. Treasury will provide more information about future buyback sizes at the next quarterly refunding,…
The US dollar remains on the defensive . It is lower against the G10 currencies but the Australian dollar, which is nursing a small loss. By a narrow margin, the Japanese yen is leading pack, though the greenback has held above JPY159 in Europe. The Canadian dollar is firm and testing yesterday’s high after a last-minute postponement of the US tariffs for three days pending continued talks. The…
The US dollar is mostly firmer against the major currencies. The Australian and Canadian dollars are the exception, but their gains are minor. Still, the Canadian dollar’s resilience in the face of the US tariffs it faces first thing tomorrow is notable. While some progress has been reported, it seems too close to call. October WTI is at a new high for the month, a little over $85. Bond markets…
The US dollar continues to trade heavily after the series of softer than expected data since the loss of US jobs in July. The stabilization of price pressures and the decline in retail sales have seen the market downgrade the chances of a rate hike next month. At the end of July, the market was discounted a little more than a 70% chance of a hike and now it is about 30%. In the current…
The combination of a loss of US jobs in July and softer inflation gauges, and an unexpected decline in July retail sales saw the derivatives market downgrade the chances that the three hawkish dissents last month will manage to convince their colleagues to hike rates at next month's FOMC meeting. The Fed funds futures finished last week with a little less than eight basis points of tightening next…
Tomorrow is the 55th anniversary of the end of Bretton Woods. R.I.P. It was an economic agreement, pegging the dollar to gold and the other currencies to the dollar, and establishing the World Bank, and the International Monetary Fund. Ultimately, however, it was political in nature. It was an exercise in the Golden Rule. He with the gold makes the rules. The US, the world’s only meaningful…
The US dollar is mixed against the G10 currencies. Despite yesterday’s constructive price action, there has been little follow-through buying today. Mostly narrow ranges prevail. While the Japanese government reported signaled acceptance of faster rate hikes, the greenback has held above JPY159 and the 10-year JGB yield edged higher. It has not fallen since last Thursday. US Energy Secretary…
The US dollar is mixed. It is mostly softer against the G10 currencies, though sterling, the Australian dollar, and Japanese yen are slightly firmer. The greenback is a bit weaker against most of the emerging market currencies. Of note, the PBOC set the dollar’s reference rate at a new 3.5-year low, and the Mexican peso is at its best level since the Mexican election in the middle of 2024. The…
The Bank of Japan intervened in the foreign exchange market in late July. Initial indications put the operation at roughly JPY8.45 trillion, near $52.8 bln, as the dollar approached JPY164. The mechanics repeated a pattern seen in January. The Federal Reserve reportedly checked on rates, which is routine. What was not routine is that it did so on behalf of the US Treasury. This time, the US…
US officials have been playing up the possibility of a near-term agreement with Iran. The market remains skeptical and has extended the recovery in oil prices. Brent futures are rising for a fifth session and reached $90 a barrel, a seven-day high. September WTI is up nearly $2 today, after rising nearly $4 yesterday and $3 in the last two sessions of last week. Rising oil prices are helping lift…
