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Run on Dollar and Yen Continues

June 29, 2017
The main driver of the foreign exchange market is the continued reassessment of the trajectory of monetary policy in the UK, EMU, and Canada.  The OIS market does not show that higher rates are discounted for the next policy meeting (August, September, and July respectively), but rather there is greater confidence that, outside of Japan, peak mone…
Run on Dollar and Yen Continues Run on Dollar and Yen Continues Reviewed by Marc Chandler on June 29, 2017 Rating: 5
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Carney's Reversal Lights Fire Under Sterling

June 28, 2017
Bank of England Governor Carney said shortly after the 5-3 vote at the MPC that now was not the time to increase interest rates.  Today sterling is flying.  It is posting the largest gain in two months and UK bonds selling off hard following Carney's stunning reversal. Two-year Gilts are yielding 30 bp, the most since last June.  As recently a…
Carney's Reversal Lights Fire Under Sterling Carney's Reversal Lights Fire Under Sterling Reviewed by Marc Chandler on June 28, 2017 Rating: 5
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Great Graphic: US Wage Growth Exceeds Productivity Growth

June 28, 2017
One of the longstanding challenges to growth US aggregate demand has been that wages have not kept pace with inflation and productivity.  The decoupling appears to have taken place in the late 1960s or early 1970s depending on exactly which metric one uses.
In my book, the Political Economy of Tomorrow, I argue the decoupling of men's wages fro…
Great Graphic: US Wage Growth Exceeds Productivity Growth Great Graphic:  US Wage Growth Exceeds Productivity Growth Reviewed by Marc Chandler on June 28, 2017 Rating: 5
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Draghi's Sparks Mini Taper Tantrum, Euro Chief Beneficiary

June 28, 2017
Sounding confident, ECB President Draghi seemed prepared to reduce the asset purchases, and this overshadowed his explicit recognition that substantial accommodation is still necessary. This is very much in line with what many, including ourselves, anticipate:  At the September ECB meeting, an extension of the asset purchases into the first part o…
Draghi's Sparks Mini Taper Tantrum, Euro Chief Beneficiary Draghi's Sparks Mini Taper Tantrum,  Euro Chief Beneficiary Reviewed by Marc Chandler on June 28, 2017 Rating: 5
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Great Graphic: Dollar Breaks Out Against Yen

June 27, 2017
The dollar is at new lows for the year against the euro and Swiss franc.  Draghi's comments earlier that transitory forces are dampening price pressures were seen as broadly similar to the Fed's leadership's assessment about US prices.  The implication is that the ECB will announce tapering its purchases as it extends them into next ye…
Great Graphic: Dollar Breaks Out Against Yen Great Graphic:  Dollar Breaks Out Against Yen Reviewed by Marc Chandler on June 27, 2017 Rating: 5
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