Economic Conditions

  • Despite market moving headlines, the markets recovered nicely from last week.

    Positive Market Action with Little Market-Moving News

    Global capital markets staged an impressive recovery after the initial reaction to the failure to freeze oil output sent reverberations through the oil markets, commodities, and Asian equities. The sharp reversal begun in Europe and extended in North America has been sustained.

    Oil prices remain firm. Perhaps the realization that the labor dispute in Kuwait has reduced output by as much as 60% (to 1.1mln barrels a day) helped underpin prices. The fall in output may be of greater immediate significance than a freeze.

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  • Surveys about success in Doha were a coin toss.

    The Doha Fail was Not a Big Surprise

    Oil producers failed to reach an agreement yesterday at the meeting in Doha.  That is the main spur to today's activity.  It is not that the outcome was a surprise.  One newswire poll found around half of the respondents thought an agreement was elusive. 

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  • Weekend headlines mix with data this week to challenge market participants.

    A Busy Week Means Market Participants Must Prioritize

    It is never easy, but the week ahead may be particularly difficult for market participants. It will first have to respond to weekend developments. 

    First, the front page of the NY Times on Saturday was a report that Saudi Arabia gave the U.S. a warning.  If a bill making its way through Congress that would allow it (Saudi Arabia) to be held responsible in American court for the terrorist strike on 9/11, the sheikdom would sell its Treasury holdings, and other US assets, which otherwise could be frozen.

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  • Singapore's monetary stance change was a surprise.

    Singapore's Monetary Authority Shifts into Neutral

    After initially extending its recent recovery gains against the major currencies, the US dollar began consolidating in the European morning.  An unexpected shift by the Monetary Authority of Singapore, replacing a modest and gradual currency appreciation with a more neutral stance, coupled with softer oil prices and weaker European equities, appears to have weighed on emerging market currencies.

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  • Dollar strength continues the same narrative in place for months.

    The Dollar is Flexing its Muscles Again

    The US dollar bid well in Europe and is poised to start the North American session with the wind to its back.  Despite firmer equity and industrial metal prices, most emerging market currencies are also succumbing to the rebounding greenback. 

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  • Over the last 5 years the Q1 growth rate has been relatively weak.

    A Weak U.S. Q1 is Par for the Course

    Over the past three months and the past month, the dollar has fallen against all the major currencies but the British pound.  Sterling's underperformance can largely be explained by uncertainty created by the Tory government's sponsored referendum on continued EU membership. 

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  • Technical indicators paint an interesting picture for the dollar, yen, and oil.

    Technically Speaking...Here is Your Indicator Update

    Although there is no convincing technical evidence that dollar's retreat in Q1 is over, we suspect it is nearly complete.  We will be especially sensitive to reversal patterns, divergences with technical indicators, and other signs that the move is exhausted.

    The fundamental economic driver of our medium term constructive outlook for the US dollar, the divergence of monetary policy between the major central banks, relative health of the financial sector, and absorption of capacity, remains intact.

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  • The Atlanta Fed's GDPNow model should shed more light on Q1 growth.

    U.S. Data Could Help Set the Week's Tone

    The US dollar is mostly lower as the North American session is set to begin.  The holiday in many centers, especially in Europe, has limited activity, and a few orders seemed to drive prices, which remain within the recent ranges.

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  • Several headlines hit this week including Yellen's speech and the Tankan survey.

    Yellen's Speech and the Tankan Survey Highlight This Week's Events

    Four events will shape market psychology in the week ahead.  They are Yellen's speech to the NY Economic Club, US jobs data, Eurozone March CPI and PMI, and Japan's Tankan Survey. 

    The broad backdrop is characterized by the rebuilding of risk appetites since the middle of February, though the MSCI emerging market equity index put in its low on January 20, as did the CRB Index.  The price of oil appeared to bottom then as well, but it retested the lows in mid-February and made a marginal new low. 

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