Search
EN Down
Language
Hi, user_no_name
Live Chat

Risk-off: Equities are showing softness in early trade Monday with the major European bourses lower after a weak session in Asia. We can look to Covid-related slowdowns, particularly the spread of delta in Asia, softer-than-expected Chinese data, and the fallout from a very poor University of Michigan consumer sentiment report on Friday. I’d even speculate that the tragedy in Afghanistan is a factor in the downbeat mood. This foreign policy disaster will have repercussions – President Biden will never recover from it. The scenes of chaos as the US evacuates Kabul is too reminiscent of Saigon.  

 

Nevertheless, after a decent run-up – record highs on Wall St, a new all-time high for the DAX and a post-pandemic peak for the FTSE 100, some giveback can always be expected. US futures were softer and the VIXX has jumped to 20 this morning with 10yr Treasury yields down to 1.26%. Meanwhile, oil is weaker and gold and Bitcoin firmer. 

 

Stagflation index: We had the weakest Michigan consumer confidence number since 2011, as the consumer sentiment index slumped to 70.2 from 81.2 last month. This was the third-worst reading in 50 years. Meanwhile, 5-yr inflation expectations rose to 3% from 2.8% as consumers worry that the permanent erosion of $ purchasing power will be a problem. 

 

UoM: “There is little doubt that the pandemic’s resurgence due to the Delta variant has been met with a mixture of reason and emotion. Consumers have correctly reasoned that the economy’s performance will be diminished over the next several months, but the extraordinary surge in negative economic assessments also reflects an emotional response, mainly from dashed hopes that the pandemic would soon end. In the months ahead, it is likely that consumers will again voice more reasonable expectations, and with control of the Delta variant, shift toward outright optimism. Consumers’ reaction to Delta’s modestly higher precautionary measures indicates the difficulty of producing optimal policy responses.” 

 

Meanwhile, the Delta variant is spreading, and China’s economy is slowing –  industrial production rose 6.4% vs 7.8% expected. Japanese GDP was more robust as it avoided a double-dip recession, but the major Asian economies are not a source of enormous confidence right now. 

 

Taper talk: Minneapolis Fed president and arch-dove Neel Kashkari said he would “feel comfortable” with tapering asset purchases “If we see a few more jobs reports like the one we just got”. He also stressed the Fed needs to “pay attention to… the inflation side of our dual mandate”. Yes, that would be a good idea… 

Latest news

Repeated warnings from Tokyo appear to support Japanese yen vs. strong USD

Friday, 12 April 2024

Indices

Japanese yen gains vs. USD as authorities repeat warnings

Dollar index soars to 5-month highs as investors eye ECB cuts in June

Friday, 12 April 2024

Indices

Dollar index soars on June ECB cut expectations, euro sinks

Gold prices are rallying on geopolitical concerns as the dollar

Friday, 12 April 2024

Indices

Uncertainty pushes gold price, dollar up on CB divergence

Copper prices scale 15-month highs as Citi points to bull market

Friday, 12 April 2024

Indices

Copper prices climb to 2024 high as Citi signals bull market

Live Chat