Archives of “Canadian Broadcasting Corporation” tag

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US 10-year yields reject the break of 1%

  
  Analysis
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Yields quickly move back higher

Yields quickly move back higher
The chart of 10-year yields is an interesting one. There was the consolidation pattern at the top that broke down this week but now it has rejected the first test of 1% and bounced 6 bps to 1.06%.
It’s now testing the bottom of the old range and we’ll soon find out of there will be a broader range of consolidation or it will range from 1.00%-1.06%.
Notably, the bond market was a step ahead of stocks this week and that break lower came well ahead of the rout in equities yesterday. There has been a great pass-through to FX, but keep an eye on yields from here.

FOMC – Powell will err on the side of removing accommodation too slowly rather than too quickly #AnirudhSethi

  
  Analysis
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The Federal Open Market Committee statement and Powell’s press conference on Wednesday US time were both non-eventful.

Responses are coming in, this a quick summary on what Oxford Economics have to say:
Powell signalled the FOMC would rather risk erring on the side of removing accommodation too slowly then removing it too rapidly, for several reasons:
  • heightened uncertainty around the pandemic remains
  • the economy and labour market are far from full recovery
  • new policy framework is asymmetrically dovish
  • policymakers want to avoid ‘taper tantrum’ that would send long-term rates higher

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Oxford Economics forecast is for a ‘gradual’ QE taper to being in 2022. but by the end of that year, the Fed’s open market account will remain very elevated.
The Federal Open Market Committee statement and Powell's press conference on Wednesday US time were both non-eventful.

Hedge fund manager Ackman says markets too complacent about the coronavirus

  
  Analysis
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Founder of Pershing Square, hedge fund manager Bill Ackman speaking on Tuesday at the Financial Times’ Dealmakers conference

  • markets once again have become too complacent about the coronavirus.
  • is hedging his equity exposure with insurance against corporate defaults
  • “We’re in a treacherous time generally and what’s fascinating is the same bet we put on eight months ago is available on the same terms as if there had never been a fire and on the probability that the world is going to be fine.”
(Ackman referring to his similar trade earlier in the year that paid off big time).
FT link is here for mote (may be gated)
(This pic for a while back)
Founder of Pershing Square, hedge fund manager Bill Ackman speaking on Tuesday at the Financial Times’ Dealmakers conference

Moody’s downgrades UK credit rating to Aa3 from Aa2, outlook stable

  
  Analysis
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Moody’s cuts the United Kingdom

Boris Johnson
This isn’t entirely unexpected but you hate to see it. Fitch recently affirmed the UK at AA-, which is the equivalent of Aa3. S&P remains one notch higher at AA but it’s under review.
Moody’s cited three reasons for the sovereign downgrade:

(more…)

US stocks close on the lows. Nasdaq hits correction territory

  
Analysis, US Market
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Nasdaq takes a dive

A few attempts to bounce intraday fell flat and stocks finished near the lows of the day. The S&P 500 fell  while the Nasdaq’s 4% drop extended the decline since last Wednesday’s record high above 10% — an unofficial correction.
The Nasdaq is now just 1.0% away from wiping out the entire August-Sept gain. Tesla shares fell 21% on the day, its worst ever one-day loss.
Nasdaq:
Nasdaq takes a dive
  • S&P 500 -95 points to 3331
  • Nasdaq -465 to 10847
  • DJIA -632 to 27,500

Brexit – UK says not afraid to walk away from talks. Less than 20% chance of a deal.

  
Analysis, Forex
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A couple of UK media items on Sunday with Brexit developments.

The UK’s chief Brexit negotiator David Frost spoke with the newspaper the Mail on Sunday
He said that the UK would leave the transition arrangement “come what may” in December. That is, deal or no deal the UK is out.
Meanwhile in the Sunday Times:
  • planning for no-deal has ramped up
  • senior figures in government have predicted that the chance of securing a Brexit trade agreement with Brussels is now less than 20%
Links for each (may be gated) if you’d like more
GBP is trading on wide spreads in early movement. Its just before:
  • 8 am in NZ
  • 6 am in Sydney
  • 5 am in Tokyo
  • and 4 am in Singapore & Hong Kong
If you are familiar with how forex market times work you’ll know that liquidity right now Is super thin. GBP swinging a little:
A couple of UK media items on Sunday with Brexit developments.

ICYMI – Pompeo announced new restrictions on the movement of Chinese diplomats in the US

  
  Analysis
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US Secretary of State Mike Pompeo with the latest in the slowly escalating tit for tat deteriorating relations with China

  • “For years, the Chinese Communist Party has imposed significant barriers on American diplomats working inside the PRC [People’s Republic of China]”
Under the new restrictions
  • senior Chinese diplomats will need approval from the State Department to visit American university campuses and meet with local government officials
  • Approval will also be required for cultural events for more than 50 attendees happening outside the Chinese embassy or consular posts.
I expect more tit for tat ahead of the US election.
US Secretary of State Mike Pompeo with the latest in the slowly escalating tit for tat deteriorating relations with China

Fauci says COVID-19 vaccine could be available earlier if clinical trials overwhelmingly positive

  
  Analysis
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Dr. Anthony Fauci is director of the National Institute of Allergy and Infectious Diseases, interview.

  • Referring to two ongoing clinical trials of 30,000 volunteers are expected to conclude by the end of the year
Fauci said an independent board has the authority to end the trials weeks early if interim results are overwhelmingly positive or negative.

  • Data and Safety Monitoring Board could say, “‘The data is so good right now that you can say it’s safe and effective,'” Fauci said. In that case, researchers would have “a moral obligation” to end the trial early and make the active vaccine available to everyone in the study, including those who had been given placebos – and accelerate the process to give the vaccine to millions.
Here is the link to the piece for more.
Dr. Anthony Fauci is director of the National Institute of Allergy and Infectious Diseases, interview. 
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