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Monday Update

April 25, 2011
The US dollar is mostly softer in relatively quiet turnover as many in Europe are still celebrating the Easter holidays.  The main weight on the dollar continues to emanate from divergent interest rate paths.   The premium Germany offers over the US on 2-year sovereign paper was 20 bp at the end of last year.  Last week it reached 116 bp.
Monday Update Monday Update Reviewed by Marc Chandler on April 25, 2011 Rating: 5
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On Vacation for Two Weeks On Vacation for Two Weeks Reviewed by Marc Chandler on April 08, 2011 Rating: 5
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Fedreal Resereve Custody Holdings

April 08, 2011
The Federal Reserve has long competed with the private sector in offering custodial services to foreign central banks. The Federal Reserve reports is custodial holdings every week. In the most recent week, through Wednesday, custody holdings of Agencies and Treasuries actually fell by about $250 mln.
This is a bit a quirk and is the exception to t…
Fedreal Resereve Custody Holdings Fedreal Resereve Custody Holdings Reviewed by Marc Chandler on April 08, 2011 Rating: 5
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Capital Offense

April 08, 2011
A disproportionate amount of mind share has been devoted to the financial aspects of the crisis. Investors and policy makers may be being distracted by this over-emphasis and leaving them vulnerable for other aspects of the crisis. The underlying challenge is sustaining aggregate demand in the face of a shift of income shares toward profits and aw…
Capital Offense Capital Offense Reviewed by Marc Chandler on April 08, 2011 Rating: 5
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Dollar Hit, Market Turns Even more Aggressive

April 08, 2011
Far from the "buy the rumor sell the fact" type of activity after the ECB I had thought likely, the market has turned even more aggressive.  Euribor futures strip is implying even more aggressive tightening than it was prior to the ECB meeting and Trichet's press conference.  The euro has been up to $1.4420.  The $1.4500-$1.4600 area…
Dollar Hit, Market Turns Even more Aggressive Dollar Hit,  Market Turns Even more Aggressive Reviewed by Marc Chandler on April 08, 2011 Rating: 5
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Don't Fret about the Potential Closure of the US Federal Government

April 07, 2011
Without a compromise, the US Federal Government may close down over the weekend. (Personally I am hoping for a West Wing-esq resolution) This is more a story of inconvenience for some services that may be disrupted and political theater than substantive political,financial or economic risk. Even the furloughed government workers are likely to be p…
Don't Fret about the Potential Closure of the US Federal Government Don't Fret about the Potential Closure of the US Federal Government Reviewed by Marc Chandler on April 07, 2011 Rating: 5
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Trichet, Trichet, Trichet or Not

April 07, 2011
The US dollar is mixed, though the euro is clearly lower ahead of the ECB meeting and, more importantly, Trichet's press conference.  Every one and their sister expects a 25 bp hike, but the guidance going forward is important, or maybe not. Observers recall that Trichet's past suggest that a tightening cycle is not at hand has not proved …
Trichet, Trichet, Trichet or Not Trichet, Trichet, Trichet or Not Reviewed by Marc Chandler on April 07, 2011 Rating: 5
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Portugal Bites the Bullet?

April 06, 2011
Portugal's caretake Prime Minister bowed to international and domestic pressure and announced he was going to make a formal request for aid within the existing framework. This would seem to suggest a package, like Greece and Ireland, that covers the anticipated financing needs for three years. However, it is not clear that he has the authority…
Portugal Bites the Bullet? Portugal Bites the Bullet? Reviewed by Marc Chandler on April 06, 2011 Rating: 5
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Color on UK Surprise

April 06, 2011
The economic surprise of the day was UK industrial output, which fell 1.2% instead of rise the 0.4% the consensus expected. First let's look at the source of the disappointment and second, implications.
Weakness was seen in all three components of UK industrial output--mining, utilities and manufacturing. Mining and quarrying fell 2.8% and this…
Color on UK Surprise Color on UK Surprise Reviewed by Marc Chandler on April 06, 2011 Rating: 5
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