So many great stories but in the end we're back to that yield curve thing ......

ref :- "Fed Presidents Seek Powell Put to Prevent Inverted Yield Curve" , Bloomberg Markets We could have jumped in a number of directions this morning, or maybe a round-up of the hot topics would have been the way forward. There's no shortage of them : Turkey : Does the central bank's unexpected decision NOT to raise rates in spite of inflation running more than three times over target confirm that President Erdogan has indeed taken control of monetary policy ? The spike in bond yields and fall in the Lira suggests that investors think so, and that the President's truly bizarre theory that it's higher rates that encourage inflation will be put into practice. Not for the first time we are r

Trump's a one-off in so many ways, but when it comes to presidential interference in Fed policy

ref :- "Trump's Fed broadside puts investors on notice" , The Financial Times, Markets and Investing , and ... ref :- "Trump's bullying of Fed could turn explosive if recession is the result" , Mark Spindel in The Financial Times, Markets and Investing It's funny how the mind can play tricks .... The independence of central banks from political influence and their ability to impose monetary policy as they think fit has become such a tenet in the running of leading developed economies that it's easy to think that it was carved in stone a very long time ago. That's why economists throw their hands up in horror when the likes of President Erdogan tries to engineer lower interest rates for the

It's all relative ....In Tokyo, a 5 basis point move in yields is BIG news

ref :- "Bank of Japan Offers Unlimited Bond Buying After Yields Jump" Doesn't sound that dramatic, does it ? And in most other markets, it wouldn't be. But this is Japan remember, where the 10yr Government bond yield has been lolling around 0.03% for some time, and which closed on Friday at a touch under 0.04%. This morning it hit 0.09%, which may not sound exactly stratospheric to many but in percentage terms represents a veritable surge. Investors have become unaccustomed to this type of thing ever since the Bank of Japan introduced measures to take control of the yield curve back in 2016, and to keep the 10yr yield at or close to zero. One can understand the desire to manage the yield cur

Can we still call the Jap Yen a safe haven ? Or the Swissie, for that matter ? And as for Gold ....

ref :- "Fed is a positive factor for US dollar ...." , Interview on Bloomberg TV with Commerzbank's Esther Reichert. Nothing is carved in stone when it comes to markets ..... things change, and the art is to recognise the change before it gets expensive. Take "safe havens", for example ..... the bolt-holes where investors take cover in times of trouble. Gold has long been the archetypal safe haven in many ways, but you would find it hard to argue that it fits the bill in the modern era. Over the last three months, at a time of highly-elevated geopolitical tensions the price of gold ($1243 per oz.) has fallen by over $100. There are a number of reasons behind gold's fall from safe-haven grace

We're well beyond "This is how it starts ...." and deep into "This is how it esca

ref :- "China Has Arsenal of Non-Tariff Weapons to Hit Back at Trump" , Bloomberg Business You remember that slightly more optimistic, "risk-on" feeling running through markets at the beginning of the week ? The cautious hope that having imposed tariffs on $34 billion of imports from China on Friday (a move that was immediately reciprocated) , President Trump might allow enough time before climbing back on the trade war wagon for cooler heads to exert some influence ? It didn't look wholly realistic then and certainly doesn't this morning, with stocks lower and the dollar higher as Mr Trump threatens to slap tariffs on an additional $200 billion of Chinese imports. The President believes tha

"The louder he talked of his honor, the faster we counted the spoons" , Ralph Waldo Emerso

Leaving all pro- or anti-Brexit leanings aside (and of course we never take any sides anyway), it's not often that we feel obliged to the now former UK Foreign Secretary Boris Johnson. We were saying yesterday how surprised we were that the resignation of Brexit Minister David Davis hadn't had a stronger negative effect on sterling. We also said that Prime Minister May still faced a sea of troubles in getting a Brexit deal, any one of which could scupper the plan and undermine the currency. Almost on cue, Boris then announces his own resignation and offers a stinging rebuke to the PM and her watered-down Brexit intentions. Sterling immediately dropped from a high of $1.3350 to $1.3210 (last

It depends which way you look at it ..... a mildly surprising start to the week

ref :- "Sterling rallies as investors bet "softer Brexit" more likely after resignation" , Reuters Markets There's a whiff of optimism in the air this morning, a bit of "risk-on" impetus that's been in short supply of late. The evidence is most obviously seen in stronger equity markets and a US dollar weaker across the board. A stronger Chinese Yuan Renmimbi, supported by a firmer fixing by the PBoC, has prompted rallies in Asian equities and EM currencies generally, and Friday's strong German manufacturing data has encouraged a little faith that the European recovery is still on track after all. Also playing a role in the marginally more bullish atmosphere today is the market's interpretati

Heads Up ! Forthcoming attractions for your consideration ......

Just in case, three things you need to be looking out for over the next 36hrs or so : Tonight 18.00 hrs GMT : Release of the minutes of the Fed's June Open Market Committee meeting (at which they decided to hike rates by 25 basis points, of course). It goes almost without saying that investors will be ferreting through the minutes in the hope of discovering some previously hidden pointer to current Fed thinking. The bias among committee members has swung towards two more rate hikes this year. We know from the Fed's "dot-plot" 8 of the 15 now think a total of four increases will be appropriate for 2018 .... which naturally means that seven don't feel that way so it's a pretty narrow majorit

Happy 4th July .... but good cheer is in short supply.

The Financial Times has a number of thought-provoking articles this morning. If the subjects vary, the most obvious common link is that the tone of all of them is more anxious than optimistic. That's often the case of course .... storm clouds are generally more newsworthy than sunny vistas but right now a state of anxiety would seem to sum up the condition of the world and its markets pretty well. ref :- "Falling renmimbi provokes renewed global anxiety over forex wars" , The Financial Times, Markets and Investing There aren't too many sure things out there at the moment, but it's a pretty safe bet that if the Chinese Yuan (Renmimbi) carries on falling in value then Donald Trump will call Ch

It wasn't supposed to be like this ..... 2018 and all that.

ref :- "Wall Street Left Reeling as 2018 Upends Almost Every Bet" , Bloomberg Markets With everything else going on, it was easy to forget the fact that we slipped into the second half of the year over the weekend. We don't know how "H1" went for you, but the Bloomberg article suggests that things have panned out very differently to most of the expectations expressed at the start of the year. As they put it : "The half that began with "melt-up" euphoria ended with melt-down fear". A Bloomberg list of asset classes and their performance so far this year will make uncomfortable reading for those who were slow to recognize that a new and altogether more testing reality has set in in 2018. The w

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