Trenders Game

The US Dollar came under pressure today during the New York session, mainly against the Euro and Yen.  The fall in the Dollar occurred simultaneously with a selloff in equities and a blowout in high yield credit spreads. While the move has been small so far, many market participants have been waiting for the Buck […]

A wrench was thrown into Mario Draghi’s plan to boost inflation and bolster the Eurozone’s economic recovery today as only 82.6bnEUR was taken up in the first of eight offerings in the so called “TLTRO” plan. The funds are restricted to only be used to lend to small and medium sized businesses, so the demand […]

Taking Draghi’s comments from the August 7th press conference and comparing them to what was said during his August 22nd Jackson Hole address shows that the ECB President is concerned about the medium term inflation picture. The language about medium term expectations being firmly anchored below or close to 2% has been a part of […]

The theme of the last 6 months has been low volatility and carry trade investing. Global investors have become ‘yield seeking zombies’, lurching from one market to another seeking out higher returns relative to  their respective domestic markets. The trades of choice have been high yield US bonds, leveraged loans and emerging market corporate and […]

Risky assets traded down to recent lows early last Friday as Barack Obama approved airstrikes to push back the spread of religious militant groups in Iraq. Since those lows, stocks, high yielding currencies and junk bonds have roared back based on a combination of factors. Fading Geopolitical Risks: There were constructive headlines out of Russia […]

Recep Tayyip Erdogan has been elected to a ten year term as Turkey’s first President. The office has existed in prior forms as a ceremonial title, but now Mr.Erdogan will be called President after already serving since 2003 as prime minister. Critics see his AK party as likely to consolidate power with a plan to […]

The Bank of Japan went into the 2nd quarter of this year with a rather bullish outlook on the economy and price inflation. The April 1st sales tax hike from 5% to 8% has taken effect and it is now becoming clear that the Abe administration underestimated the impact. In the last few months, inflation has […]

Today is the first day in some time that there has been obvious and even broad dollar strength. The Dollar rally began during the London session and took another leg higher after the great consumer confidence numbers that came out at 10am. The trends we see with today’s price action should provide valuable clues for […]

With the entire market standing around waiting for some totally obvious FOMC shift in forward guidance, Janet Yellen may have subtly delivered that change this morning. The Fed Chief’s semi annual testimony today was a long and arduous  rehashing of current Fed policies without much noticeable change in content. As I tuned in today two […]

In early January of this year selling the Canadian Dollar was a consensus trade. The Bank of Canada was making a shift towards dovish language, repeatedly saying that ‘rate cuts were not off the table‘. BoC Governor Stephen Poloz seemed to capitalize on an extremely harsh Winter in Canada as a reason to become more […]