Interest Rates are Driving Euro and Pound
The shift in interest rate expectations in the euro zone and UK continues to be a dominant force in the foreign exchange market. The euro poked briefly through the $1.35 level for the first time late November. Sterling is trying to extend its advancing streak to the ninth consecutive session and remains near yesterday’s highs, [...]
The Euro Soars on Successful Auctions
Global Equity markets moved higher this week as a combination of solid earnings, better than expected economic data, and successful debt auction in Europe, drove markets higher. Commodities were mixed, as precious metals were hit hard at the end of the week, after the Chinese central bank announce an increase of lending requirements by 50 [...]
Markets Remain Resilient Despite Downgrades and Turbulence
The second to last week of the year was a decent week for global equity market performance. We started the week absorbing the economic data points released by China, and ended the week, hearing about Moody’s downgrade of Ireland, and the passage of the tax extension by the house in the US. The Nikkei rose [...]
Periphery Yields Contract
Euro-zone spreads have relaxed a bit following the passage of the Irish budget with the Irish 10-year down 5bp followed by a 1bp drop in Portugal’s 10-year borrowing costs. At the same time, German 2-year notes declined, sending the yield 9bp higher, after investors bid for less than the full amount of securities offered. More [...]
RBA Leaves Rates Unchanged, Boosting AUD/USD
The RBA left rates unchanged at 4.75%. The Bank said that lending rates are above average and that current policy is appropriate for the economic outlook. The statement is supportive of no change in rates through early next year, although consistent with Governor Stevens’ view in his November 26 testimony that is not unreasonable for [...]
Euro declines as European Yield rise to new Highs
The Euro continued to fall today against most major currencies, as the perceived contagion continued to make its way through numerous European countries. The yield premium demanded by investors to hold Spanish 10-year bonds over the benchmark German bund rose more than 0.3 percentage point to top three percentage points, while Italy’s 10-year bund spreads [...]
S&P Downgrades New Zealand
S&P lowered New Zealand AA+ rating outlook to negative, noting that “The main risk to the ratings would be a significant weakening in the credit quality of New Zealand’s banking sector.” The move took the markets off guard. Some in the market are convinced that the change is not justified. S&P also noted that the [...]
Euro on the Ropes
The Irish debt issues continue to lead the headlines when it comes to the health of Europe and the future direction of the Euro. European sovereign bonds are a bit muted today after speculation continues about a potential bailout for Ireland. Namely, Ireland’s 10-year yield is down 10 basis points on the back of the [...]
Brazil Raises IOF Tax
Brazil’s decision to boost the IOF tax again on fixed income foreign investment to 6% from 4% previously, was not a big surprise for the markets. Still, this is a strong statement since it comes just two weeks after it was hiked to 4% from 2%. In addition, Brazil increased the tax on margin deposits [...]
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