A quieter night overnight, with no large moves, but no strong reversals either. US equities eeked out fractional gains, while Europe was still weak. Yields were a little lower and currencies in G10 for the most part flat. Oil did rise and Glencore, yesterday’s prophet of doom, bounced 17%.
“Emma also makes regular comments to print, radio and TV media on currencies and global financial markets. ”
Emma is a Senior Currency Strategist and works with the global currency strategy team. Emma advises the Bank’s dealing rooms and clients on the Australian dollar and global currencies more generally.
Emma also makes regular comments to print, radio and TV media on currencies and global financial markets.
Emma has a Masters degree in Economics from the University of Adelaide.
Emma has been at the NAB since 2011 and previously has thirteen years experience working for global investment banks, as an economist and currency strategist, in Sydney, London and more recently in Hong Kong.
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Friday’s tone was set by Fed Chair Yellen, early in the Sydney session. In this, she backed up the Fed speakers post the FOMC, which have reiterated that the Fed are looking to raise interest rates this year.
It’s a bit of pick and mix for explanations regarding market moves in the last 24 hours. There has been no top tier economic data, no new speeches, or surprises.
Not sure this was the reaction the Fed were looking for when they decided to pause and give a shout out to the struggling EM economies and global economic risks.
The time arrived but the Fed couldn’t bring itself to raise rates for the first time since the Financial Crisis. In a hugely anticipated FOMC meeting, the market had priced just over a quarter percent chance of a hike, and just under 50% of economists expected a move, but they remained on hold.
Another relatively calm and comfortable session heading into the FOMC meeting. With markets and economists split on the outcome, something will move if the Fed does, or it doesn’t. So enjoy the quiet day today, ahead of tomorrow.
Do It Already is the headline of a Bloomberg article today, but mirrors the sentiment in articles across the press and the discussions on our own floor. Markets are like rabbits in spotlights, uncertain as to which way to shift, just in case there is a move by the Fed.
There is a flurry of opinions, newsflow, chatter and speculation about the Fed this week, but at the end of the day, there isn’t much that is new to report for markets. Still waiting for the FOMC.
It’s been relatively quiet from Friday and likely to stay that way for a few more days yet. The news flow has been limited and what there has been, has been clouded by one-offs.
The global financial markets are breathing a sigh of relief and enjoying the advent of Spring here in the Southern Hemisphere. Happy days: the Fed may wait a little while before raising rates and China seems to have everything sorted.
With the US out for Labour Day and not a lot of economic data elsewhere, it was a relatively quiet night. Market moves were somewhat restrained, awaiting guidance from the upcoming FOMC meeting (next week) and how China’s economy deals with the current uncertainty.
Things aren’t really getting better. The circular theme of markets continues, with equities weakening, weighing on broader risk, weighing on currencies, weighing on equities. And so it goes. While the Fed waits to decide to raise rates, this is not helping the global markets.
In the immortal words of Johnny Cash (singing) “I ‘m going to Jackson…” Nope, can’t do it justice, although Ray (MT’s co-author) is definitely having an influence on me. But we do see the central bankers heading to Jackson Hole (JH)
Difficult huh? You thought you knew which direction this was all going? After big moves there can often be big reversals. It doesn’t mean that the underlying issue is resolved but rather is often a factor of positioning, liquidity and uncertainty. We have a jumble of all three going on.
China did what the market was looking for (on Monday) by easing policy, but it appears that the markets want more. Thanks, but we are not quite happy yet.
Inflation is back in vogue, and (in the US) it is being kept lower by a stronger USD and lower commodity prices.
Direction was taken from the weakness in the Chinese equity market yesterday, as the overnight sessions provided little new news of its own.
It’s getting interesting. And it is likely to remain that way for a little while yet. China’s move to a more market orientated currency is causing volatility and uncertainty and it might take a while until there is clarity.
Markets are a little wary of the implications of China’s devaluation yesterday, combine that with uncertainty around the Fed’s upcoming interest rate hike and mix in Northern Hemisphere summer liquidity and you have a slightly uneasy, conflicting set of market moves overnight.
Much of yesterday and the overnight sessions were characterised by relatively quiet moves, with bursts of activity.
It appears markets have run out of oomph. We have gone back to typical summer markets, where there is a drifting of trends but not a lot to get your teeth into.
Sitting, waiting for the Fed, in summer markets. That pretty much characterises the last day, which was surprising after the angst of the prior period.
Back to our day jobs, with a reprieve on being political or equity analysts, we can return to the global economy. Markets also chose to ignore the after-party cleaning up in Greece, to focus on central bank speak – both actual and what is to come.
While being glued to the long running soap opera of the Greek debt situation, there is another, more mini-series like, show going on in the East. And like Netflix versus NBC (who shows Days of our Lives) it has crept up and has captured everyone’s attention.
Markets were disappointed by the lack of progress in Greece overnight; albeit they should be used to that by now. It did lead to a big drop in European yields and equity market, EUR also underperformed for much of the day.
Greece has officially missed its payment to the IMF, but markets are seemingly unconcerned. We have passed that mattering for now.
Well, we didn’t see that coming, neither did the Institutions (nee Troika), nor the markets. Greece has pulled the negotiations plug at the last minute and put the deal to a national referendum (5 July) AFTER the deadline for payment (1 July).
All is well, solved, sorted; just not signed. Markets are pretty content with the idea that Greece and its creditors will do a deal before the June 30 deadline. And the Fed will hike in September, and China can avoid an equity market accident.
Except he never came. We wait, there is a vast amount of commentary and expectation, and even a fair degree of optimism. And nothing might happen for a few days at least. But in this case, there will be an endpoint.
The FOMC meeting was a bit of a mark-to-reality exercise for markets, after perhaps getting a little ahead of itself. This applies both to the intra-day moves and the direction over recent weeks.
There is a nervous tinge to the commentary overnight, but market moves have been relatively light, and the same is expected for today. Equities are modestly higher in the US and Europe, yields are lower generally, while the USD outperformed.
You’d think it was a quiet night overnight: US equities were flat, European stocks a little down and currencies traded in a very tight range.
Well if Mr Draghi says it is so, we’d better get used to it. Bond yields, particularly in Germany, continued their rise yesterday; despite the ECB’s Draghi telling us that they are committed to their QE program.
Big moves overnight, not all of them consistent, but they may have caught out investors positioning for a rise in risk aversion. As news of a possible deal between Greece and its creditors came in, bond yields – led by Germany, rose sharply.
Seemingly there were many “light bulb” moments overnight, when competing ideas, that have been around awhile, suddenly gain traction and markets run with them.
Tick tock, tick tock – that’s both the sound of time passing on one of the quietest days in the markets but also that of the countdown to Greece needing to come to an agreement with its creditors.
The ECB reminded markets that they were still there and still implementing QE. That allowed for a rally in European stocks and led to underperformance by the EUR.
After Wednesday night’s excitement, there was a collective deep breath overnight, with some of the preceding moves reversed. There was little newsflow but what there was allowed for some relaxation of the prior day’s anxiety.
If you pull an elastic band hard enough, it will snap back and might hurt. It seems we are getting that in yields, but we know that the band runs out of energy at some point.
We are likely in for an interesting debate ahead: Central banks lower policy accommodation to astonishing levels and then suggest that markets might be a touch expensive.
Today is a holiday in much of Asia and Europe (Happy May Day) but that doesn’t stop the dataflow.
It was particularly quiet overnight, with the US on holidays. The poor European and UK data didn’t worry markets much, which, in the main, were taking a little nap
Key economic insights from this week and the week ahead