The prevailing trend across trading floors this morning is a rare lack of conviction. One contact said, “It is silent here, everyone is just sitting staring at their screens, no one has any convictions”. This loss in confidence could lead to oversized reactions—volatility—to breaking news; especially further negative developments in Europe. The VIX Index, which […]
Archive:
May 2010
Rising producer prices eventually translate into higher consumer prices as businesses are forced to pass on a portion if not all of the price increments to their customers. So what you might be asking, this morning’s PPI indicated that producer prices fell -0.1% on a monthly basis. While this is true the PPI is broken […]
Defying most investors’ expectations, LIBOR’s climb has continued unabated, despite the reopening of the Fed’s Reciprocal Currency Swap lines. According to the ECB’s records on May 11th seven bidders tapped USD9.2bn of the swaps at a rate of 1.22%, or nearly 100bps above the OIS funding rate. Ray Stone of Stone & McCarthy Research Associates, […]
Credit card delinquencies declined in April for the fourth straight month, indicating that consumers are gaining traction. Diminishing delinquency and default rates could eventually lead lenders to reduce strict lending standards; following significant tightening subsequent to the subprime crisis. On this note, more lenient lending standards could have wider implications for the U.S. economy, which […]
As of this morning, not only have US equities (as measured by the MSCI)outpaced their global counterparts, but on a year-to-date basis it’s the only index still showing gains, albeit somewhat modest. Interestingly, as of this week the spread between the MSCI US and MSCI World index reached its highest spread of the year, mostly due to […]
Chatter’s spreading across Swiss trading floors that the country’s national bank has begun loosely managing the CHF/EUR exchange rate; preventing it to go below the 1.40 level despite prevailing trends. Traders are indicating that the Swiss National Bank have a large bid around the 1.40 level to keep the currency in check. The country’s small […]
Rampant risk aversion, receding energy prices, and a USD rally have led to significant steepening in the short-end of the U.S. breakeven curve, with the potential for more to come ahead of next week’s CPI release (see chart). So long as risks in Europe continue to escalate and CPI growth comes in at or below […]
On the surface the investors should be celebrating April’s higher than estimated retail sales growth, but a look behind the curtain reveals a slightly different picture. The retail sales control group, which the government uses to calculate GDP, actually fell -0.2% during the month, its first decline since July 2009 (see chart). The control group […]
On the surface, a recovery in retail sales is not only a harbinger for stronger economic growth, but could prove to be the missing link for job creation (see chart). Climbing out of the deepest recession since the Great Depression, consumption growth has been surprisingly tepid, at least partially due to companies’ lack of confidence […]
European equity markets and the Eurozone currency look to be pricing in separate outlooks for the future of the Eurozone after an unprecedented rescue package. As the chart below highlights, European equities as tracked by the MSCI European index has rebounded sharply from its pre-bailout low–surely aided by the ECB’s recent actions–, while the Euro […]