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  1. #1
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    [EN] A recuperação do dolar é sustentável?

    “It was really hard to justify the speed with which the dollar had weakened this year”

    Chelsey Dulaney
    Sept. 30, 2017

    After a bruising year, the strong-dollar trade is staging a comeback heading into the final stretch of 2017.

    The greenback edged up about 0.7% against a basket of major peers tracked by The Wall Street Journal in September, snapping a six-month losing streak that had been the currency’s longest in a decade. The currency’s dramatic slide this year—driven by investor concerns about the U.S. economic and political outlook—confounded a broad consensus that the dollar would strengthen heading into 2017.

    Now, signs that the Federal Reserve will maintain a steady pace of U.S. interest-rate increases, along with Republicans introducing plans for a tax overhaul, are leading investors to re-evaluate bets built up against the dollar in recent months.

    “It was really hard to justify the speed with which the dollar had weakened this year,” said Daniel Katzive, head of foreign-exchange strategy for North America at BNP Paribas .

    Even with September’s recovery, the dollar remains down 7.1% for the year and on Friday notched its third consecutive quarter of declines. Yet the recent rebound gives some investors hope for a resurgence. BNP is forecasting that dollar will gain more than 2% against both the Japanese yen and euro by the end of the year.

    “We’ve seen a big shift in momentum,” said Brad Bechtel, a managing director in foreign-exchange trading at Jefferies Group.

    One factor boosting the dollar: Federal Reserve officials have signaled they will continue to tighten monetary policy, easing worries among investors that weak inflation would prevent the central bank from raising rates.

    At the close of its September meeting, the Fed penciled in one more rate raise for 2017 and three for next year. Markets now forecast a 78% chance of another U.S. rate-increase this year, up from about 34% a month ago, according to CME Group data.

    Expectations that rates will rise typically support the value of the dollar by making U.S. assets more attractive to yield-seeking investors.

    “We’re back in the mode where the U.S. is going to go outperform,” Mr. Bechtel said. “We’re tightening faster than other places.”

    At the same time, central bankers in Europe and Canada have grown more cautious on the prospect for tightening policy at home as stronger currencies begin to weigh on their economies. While a strong currency is often a reflection of confidence in the economy, it also can dampen inflation and growth prospects by making imports cheaper and exports more expensive.

    Bank of Canada Governor Stephen Poloz said in a Sept. 27 speech that “monetary policy will be particularly data-dependent in these circumstances and, as always, we could still be surprised in either direction.”

    European Central Bank President Mario Draghi also has struck a more cautious tone lately, saying in a recent speech that “volatility in the exchange rate represents a source of uncertainty.” An unexpectedly weak showing for German Chancellor Angela Merkel’s conservative alliance in September’s election has added to pressure on the euro.

    The euro lost 0.8% against the dollar in September, though it remains up about 12% for the year. The Canadian dollar has fallen 2.5% since hitting a two-year high in early September.

    The U.S. political landscape also has recently turned more supportive for the dollar.

    Republicans have released their plans for a sweeping tax overhaul, helping to revive hopes that the Trump administration will enact an agenda that could boost U.S. growth and accelerate U.S. interest-rate increases.

    Some analysts say any rebound in the dollar will be short-lived. Hedge funds and other speculative investors are holding a net $17.9 billion in bets against the dollar, the highest level in five years, according to data from the Commodity Futures Trading Commission.

    “The big picture is that the dollar rally has still topped out,” said Mr. Katzive, who expects the dollar to resume its slide next year. “Once we get closer to the end of the year, it will be time to think about the downsides for the dollar.”

    Chris Gaffney, president of EverBank World Markets, said the currency is facing a number of threats. A continuation in the trend of weak U.S. inflation could stymie the Fed’s plans for raising rates, while geopolitical tensions between the U.S. and North Korea could favor currencies such as the Japanese yen and Swiss franc over the dollar.

    Longer-term pressures, including an aging U.S. recovery that is being eclipsed by growth abroad, also make a sustained comeback in the dollar unlikely, Mr. Gaffney said.

    “Whether or not we get tax reform doesn’t matter that much for the dollar in the long term,” he said. “The U.S. is not going to keep up with the rest of the world. We turned at the beginning of the year, and we’re moving out of that five-year dollar rally.”


  2. #2
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    As Emerging Markets Stocks Soar, Investors Look for Safety From a Downturn

    The higher cost of hedging reflects how investors are becoming more concerned that the forces that have supported this year’s rally may be giving way.

    Carolyn Cui
    Sept. 30, 2017

    Emerging market stocks are on pace for their best year since 2009, but a growing number of investors are seeking protection against a possible downturn.

    Stocks in emerging markets rose 6.6% in the third quarter. That brings this year’s gains to 25%, which—if the level holds—would be its best annual performance since a 75% return eight years ago. The MSCI Emerging Markets Index has yet to post any significant losses this year, a rare tranquility for an asset class that routinely experiences sharp selloffs.

    The rally reflects faster earnings growth, a weaker dollar and easy global monetary policies that make riskier investments more attractive.

    But as the gains pile up, many investors are taking steps to hedge themselves as they worry about a pullback.

    Rising demand for this protection has pushed the cost of buying options against declines in the iShares MSCI Emerging Markets exchange-traded fund to the highest level since January 2016, according to Trade Alert.

    These investors have been buying options as a hedge against any downturn in emerging market stocks, rather than exiting their positions and giving up the ability to benefit from additional gains.

    Still, the higher cost of hedging reflects how investors are becoming more concerned that the forces that have supported this year’s rally may be giving way.

    Some worry that as central banks in the U.S. and Europe rein in stimulus measures, that could upend the easy-money environment that has helped lift emerging markets. A slowdown in emerging-market growth could also trigger capital outflows from developing countries and chip away at gains in the stocks. If the recent rebound in the dollar continues, that would cut into emerging-market returns for dollar-based investors.

    Others are concerned that geopolitical uncertainties including escalating tensions between the U.S. and North Korea are a threat to risky assets like emerging markets.

    “It’s prudent to recognize these are the risks and we want to have some downside protection in place,” said Dennis Cogan, co-portfolio manager of the $323 million Calamos Evolving World Growth Fund.

    Toward the end of second quarter, the fund started to purchase put options on certain Indian stocks that had risen sharply and appeared less attractive. Put options are contracts that give the owner the right, but not the obligation, to sell a security at a certain price. Mr. Cogan’s put options cover about one-fourth to one-third of the value of the assets in the Calamos fund’s portfolio, he said.

    The $250 million Driehaus Emerging Markets Small Cap Growth Fund has added put options on the iShares MSCI Emerging Markets ETF and a Brazil-focused ETF, which accounted for 14% of the fund’s assets, as a way to protect its portfolio, according to the fund’s statement for August.

    Investors have reasons to turn defensive. So far this year, the MSCI EM index’s biggest drop was a 3.6% slide in late September, the smallest drawdown since the index’s inception in 1988. In every calendar year since 1996, the index has posted a market drop exceeding 10%, with half of these drawdowns exceeding 20%, even in years when emerging markets delivered big gains, according to MSCI Inc.

    Luca Paolini, chief strategist at Pictet Asset Management, which has about $500 billion of assets under management, said he sees the risk for a correction in emerging markets over the next three to six months.

    In August, China’s factory output, retail sales and fixed-asset investment all slowed from the prior month, raising concerns that the world’s second-largest economy might have cooled down again. In the U.S., rising business confidence, a recovery in economic growth, and the onset of the Federal Reserve’s balance-sheet reduction efforts all pointed toward higher U.S. interest rates, which could help stabilize or even strengthen the dollar.

    “I think it’s time to reduce some exposure or put some hedge on emerging markets,” Mr. Paolini said.

    Some institutional investors have been writing, or selling, options against emerging-market indexes, as a way to enhance returns by betting that volatility will stay low in these markets, according to Jack Hansen, chief investment officer at Parametric, which manages money for pensions and endowments.

    Global investors have clamored for a share of emerging markets for much of this year. Emerging-market equity funds saw a net inflow of $46 billion through the first eight months of 2017, according to the Institute of International Finance. However, the funds have suffered outflows in recent weeks, the institute said.

    “They see opportunity, but they also have a little bit of fear that emerging markets can be very volatile,” said Randy Swan, lead portfolio manager of the Swan Defined Risk Emerging Markets Fund, which uses put options to protect its portfolio.


  3. #3
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Hong Kong’s stock index is the world’s best performer to date, but is the party over?

    Analysts say a correction looms as the Fed is expected to begin unwinding its balance sheet, which could lead to tighter liquidity and higher interest rates

    Laura He
    29 September, 2017

    Hong Kong’s benchmark Hang Seng Index (HSI) closed at 27,554.3 on Friday, the last trading day of September. It had risen 5,553.74 points, or 25 per cent in the first three quarters, outperforming its main counterparts in Asia-Pacific, the US, Europe and other markets, according to data compiled by Bloomberg at the close of trade in Hong Kong on Friday.

    The biggest booster to the index’s gain was Tencent, which has soared 78 per cent to date this year on the back of strong financial results, especially from its soaring mobile game revenue. The counter contributed 1,572 points, or 28 per cent, to the HSI’s gains.

    “But investors have to be careful about the last quarter, as the Hang Seng Index has gathered a large amount of gains, and is inclined to have a correction,” said Linus Yip, chief strategist for First Shanghai Securities.

    “The biggest concern is the Federal Reserve’s reversal of the quantitative easing programme, which could result in tighter market liquidity and higher interest rates, and cause capital outflows from emerging markets.”

    The Fed decided in its September meeting that it will start to unwind the US$4.5 trillion balance sheet in October, a profound change in US monetary policy that will have implications on the global bond market, risk assets and economic conditions. It also signalled another rate increase later this year.

    Traditionally, investors were nervous about October, as some of the largest historical market crashes had occurred in October, including Black Monday, Tuesday and Thursday, Yip said.

    He said the Hang Seng Index had risen for eight consecutive months through August, before staging a retreat in September, which was a sign that “the index level may have reached too high a level”.

    Some international investment funds may have locked in profits, and would tend to adopt a more conservative approach for the rest of the year, he added.

    He expected the index to have a correction at the beginning of the fourth quarter, namely October, with a likelihood to fall below the 27,000 level.

    Others such as Louie Shun, chief executive of Sincere Securities agreed, adding that some risks factors had not been priced into the market.

    “The Fed’s unwinding of the balance sheet will draw the liquidity out of the market and cause global investment funds to de-leverage, ” Shun said.

    In Hong Kong, banks’ interest rates could rise as liquidity tightens, which will have a negative impact on property prices and real estate developers.

    “I would not be surprised if the Hang Seng Index drops below the 25,000 level [in the fourth quarter],” Shun said.

    Technology and property counters that have shone in the first three quarters, could see a pull back in share prices and were unlikely to outperform the benchmark index, he added.

    On the mainland, the benchmark Shanghai Composite Index closed Friday at 3,348.94. It had gained eight per cent for the first three quarters.

    The CSI 300 index of large-cap companies listed in Shanghai and Shenzhen jumped 16 per cent during the same period. Leading performers were “new economy” sectors, including technology and consumer companies.

    In June, MSCI announced that it will add mainland Chinese shares into its benchmark emerging market index, a move widely regarded to speed up the inflow of foreign funds into China’s stock markets.

    Government statistics showed on Friday that overseas fund inflows into mainland securities reached US$20.6 billion in the first half, more than four times the amount for the same period last year.

    However, Shun cautioned that China’s capital outflows could worsen in the fourth quarter, if the Fed’s policy tightening causes a rapid rise in long-term bond yields.

    Geopolitical risks from North Korea could also heighten uncertainties and accelerate capital flight from risk assets, he added.


    "correction" = queda de 10+ %

    "hangover" = endividado sem crédito para novas oportunidades de investimento

    "overhang" = endividado com receita insuficiente para pagar os juros dos empréstimos
    Última edição por 5ms; 30-09-2017 às 19:49.

  4. #4
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Why Americans are gloomy about the future

    American families have suffered roughly two decades of wealth stagnation, despite years of job growth and economic recovery.

    Matt Phillips
    Oct 1, 2017

    New numbers from the Federal Reserve’s in-depth survey of the financial state of U.S. households released last week helps explain much of the nation’s dour mood and increasingly fractious.

    The simple fact is the typical American family was far less wealthy in 2016 than before the financial crisis and Great Recession struck a decade ago, according to findings from the Fed’s triennial Survey of Consumer Finances.

    That’s despite the fact that median net worth of a typical family in 2016 was $97,300, up 16 percent from 2013, the last time this particular Fed survey was conducted.

    Even so the typical family’s wealth was still 30 percent lower than in 2007, when the average family’s net worth of nearly $140,000, a reflection of the lasting damage the housing bust inflicted on American affluence.

    In fact, net worth for a family in 2016 — assets minus debt —remained 8 percent below its 1998 level of roughly $106,000.

    In short, American families have suffered roughly two decades of wealth stagnation, despite years of job growth and economic recovery.

    The numbers released this week were part of the Fed’s intensive triennial Survey of Consumer Finances, in which more than 6,200 families participated in interviews about the state of their finances. The interviews typically last 90 minutes, and in some cases stretched to three hours, the Fed said. That level of detail allows the survey of consumer finances to paint a much more granular — and in some cases less rosy — picture of American household finances than economic snapshots that are based on high-level aggregates data.

    For example, the Fed’s quarterly data shows that overall net worth of households and nonprofits has more than recovered from the steep decline suffered during the housing and stock market busts of 2008 and 2009. The most recent number for the second quarter of 2017 shows aggregate household net worth at a record $96.2 trillion, driven higher by large rebounds in the housing and stock markets.

    Looks pretty good at first glance. But this essentially just tells us how big the overall “pie” of American wealth is. It doesn’t tell you who gets a sliver or who gets a large slab.

    As the new data released yesterday shows us, those in the top 10 percent of American wealth take the biggest chunk by far. For instance, New York University’s Edward Wolff found — using Fed data for 2010 — that the wealthiest 10 percent of American families own more than 80 percent of the U.S. stock market. So the vast majority of the gains in the stock market over the last few years have gone to relatively few people.

    Similarly, while housing remains the most important asset for most families, fewer and fewer families actually own houses. Homeownership rates fell to 63.7 percent in 2013, according to the most recent Federal Reserve survey — the lowest level on record going back to 1989. That means fewer American families benefitted financially from the rebound in housing prices over the last few years.

    The Fed’s numbers also help explain why sharp increases in income in recent years haven’t done much to improve the national mood.

    Median household income, a key measure of what a typical U.S. household makes, rose 3.2 percent to $59,039 in 2016, according to new data from the U.S. Census Bureau. That’s the first time the annual household income number climbed back to the level it hit back in 2007, when the median income was $58,149. In fact, 2016 incomes are effectively back to where they were at their all-time peak in 1999, when they hit $58,665.

    But despite those improvements, the national mood remains decidedly sour.

    Roughly 67 percent of the American public says it is dissatisfied with the direction the country is going in, according to recent data from Pew Research.

    And Americans are increasingly gloomy about the outlook for the country, with 48 percent saying that future for the next generation will be worse than today.

    They weren’t even that gloomy during the worst of the Great Recession and the long slow recovery. And from a longer-term perspective, research has shown that Americans of middle and less than middle income are significantly less happy than they used to be.

    The stark decrease in wealth—and the security and safety it provides—among large chunk’s of the American population helps explain why.


  5. #5
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    PIB per capita do Brasil só deve retornar ao patamar pré-crise entre 2021 e 2023

    Douglas Gavras
    01 Outubro 2017

    O brasileiro vai ter de esperar mais cinco anos para conseguir recuperar o padrão de vida que tinha antes da recessão. Com a crise prolongada, o Produto Interno Bruto (PIB) per capita, medida que serve de referência do nível de riqueza da população, só deve retornar ao patamar de 2013 entre 2021 e 2023.


    Para Bruno Lavieri, da 4E, um dos fatores que afetaram o desempenho do País foi a queda nos investimentos nos últimos anos e os aportes mal feitos antes da crise, em setores que nem existem mais. “O PIB potencial também sofreu com o baixo crescimento da População Economicamente Ativa (PEA).”


    A economista-chefe da XP Investimentos, Zeina Latif, concorda que ainda será um longo caminho até que o PIB per capita do Brasil recupere o patamar pré-crise. “Ainda assim, a atual inflexão da economia é emblemática e deverá causar impacto na eleição de 2018”, afirma.

    “O Brasil precisa correr muito para não ficar para trás. A crise de 2015 e 2016 foi quase que exclusivamente nossa, diferentemente de 2008, quando a crise foi generalizada”, diz Lavieri.


    Crise particular. Quando se leva em conta o crescimento da renda, países emergentes de porte semelhante ao do Brasil registraram avanços entre 2013 a 2016 em comparação aos quatro anos anteriores, de 2009 a 2012. A economia brasileira teve o pior desempenho segundo esses critérios.

    “O Brasil está muito aquém de outros países. Segundo projeções para 2022, nosso PIB per capita vai crescer em média 0,9%, de 2017 a 2022, quase a metade da média de Chile, Argentina, México, Colômbia e Peru”, diz o economista Marcel Balassiano, do Ibre/FGV.


    “É preciso considerar as variações cambiais na comparação com outros países, mas o problema é que a política econômica anterior também desacelerou o crescimento do PIB potencial, por isso a recuperação sem reformas estruturais é lenta”, diz Cristiano Oliveira, do Banco Fibra. “A agenda reformista atual havia sido traçada, mas abandonada, por Fernando Henrique Cardoso e Lula. Para recuperar o tempo perdido, é preciso persistir numa política econômica que promova crescimento com produtividade e sem artificialismos.”


  6. #6
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Federal Reserve raises expectations for December rate rise without rattling markets

    Mohamed El-Erian

    Federal Reserve officials are at it again, skilfully. Through verbal guidance, chair Janet Yellen and some of her Federal Open Market Committee colleagues managed — in a policy move reminiscent of last March, though not as extreme — to drive up market expectations of an impending interest rate rise.

    Once again, they did so without disrupting financial markets in what constitutes another step in their long exit from unconventional monetary policy.

    This is taking place in the context of uncertainties about the composition and leadership of the Board of Governors, strengthening prospects that the Fed will succeed in continuing to deliver a “beautiful normalisation” of monetary policy after years of reliance on experimental measures. Yet the list of national, regional and global uncertainties is long, highlighting the importance of successful policy handoffs and the delicateness of some asset markets.

    Recent remarks by officials, including last week’s Yellen reminder that “we should also be wary of moving too gradually” on policy adjustments, have driven the recent repricing of fixed income markets. This was reinforced by the announcement on Wednesday of a ‘blueprint” for US tax cuts and reform.

    With markets recently nearly doubling their implied probability of another 2017 rate rise, yields on 2-year US Treasury securities last week registered their highest level in almost 10 years. This pulled up longer maturities, with the move up in Treasury yields spilling over to Germany and Japan (after a period where German yields have had an unusually large influence on their US counterparts). Yet stock markets turned in a solid week, with key averages continuing to hover near or at record levels, and with volatility remaining muted in what, so far this year, is an historical record for containing the daily maximum fall in the broad S&P index of US stocks.

    This new step in beautiful policy normalisation is not happening in a vacuum. With an unusually high number of vacancies on the Board of Governors, including the vice-chair’s, and with the chair’s first term expiring early next year, there are questions about the composition and leadership of the central bank at a time of this delicate policy transition. This is compounded by a long list of unusual uncertainties, be they geo-political, political or economic.

    The North Korean nuclear threat has not gone away. It is yet to be seen how the surge in nationalism in the west will influence regional and global economic relations, as well as much-needed domestic policy handoffs (most notably away from excessive reliance on central banks and in favour of a more comprehensive pro-growth policy response).

    Meanwhile, Yellen reminded us that the Fed — indeed, several central banks — are yet to solve the “mystery” of lowflation; and this at a time when productivity is generally subdued and the relationship between unemployment and wages is behaving in an historically peculiar manner.

    All of which serves also to highlight structural uncertainties, including those associated with technological and demographic change, distrust of institutions and experts, and Brexit implementation.

    Complex global economic issues are also on the list, and they extend beyond the risk of protectionism — from the “hot potato” syndrome of today’s foreign exchange markets in which virtually no country is able and willing to absorb prolonged currency appreciation, to the uncertainties associated with more than one systemically important central bank joining the fed in normalising policies.

    In welcoming yet another successful policy manoeuvre, markets need to recognise that much work remains for the Fed whose ultimate success depends not only on what it does but, perhaps more importantly, also on what happens around it (domestically and internationally).

    Yes, due to consistent market conditioning to “buy the dip,” it now takes an unusually big shock or shocks to lead to (far from historically unusual) asset price corrections.

    But markets should also guard against prices galloping too far ahead of realities on the ground. Otherwise, the risk of unsettling air pockets with adverse economic implications will rise further, as well as the time inconsistency for central banks between their inflation objectives and those relating to financial stability.


  7. #7
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Foreign investors’ appetite for US debt will determine sustainability of bond sell-of

    Joe Rennison

    A new front has opened in the battle between bulls and bears in the $14 trillion Treasury market.

    The yield on the benchmark 10-year note rose 30 basis points in September, its biggest monthly move this year. The prospect of Donald Trump and Congress reviving a seemingly moribund plan for tax cuts and the Federal Reserve putting investors on alert for a December rate rise have shaken the market.

    However, the yield on the 10-year note has pulled up short of 2.4 per cent, a level it has twice tried and failed to decisively break since yields touched their high for the year of just over 2.6 per cent in March.

    As the fourth quarter begins, some analysts and investors believe the risks are building that 2017’s unexpected rally in Treasuries will now buckle if fresh economic stimulus from Washington delivers stronger growth, higher inflation and larger budget deficits.

    “It is certainly a risk,” says Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott. “You could see higher rates from economic growth and deficit spending. The timing of the moves in longer term interest rates relative to the tax plan announcements shows there is clearly an effect there.”

    In addition to the chance of stimulus from Washington, the appetite of foreign investors for US government debt will be pivotal in determining whether the bond market sell-off seen over the past month is sustained or proves to be yet another skirmish won by those convinced the future is one of low yields.

    Led by China and Japan, foreign investors own more than 40 per cent of the Treasury market, according to official data. In the first six months of the year they purchased almost $150bn of long-dated Treasuries — securities with a maturity longer than one year — close to three times the amount bought in the same period in 2016.

    Data from Japan’s finance ministry show domestic investors buying $56bn in foreign long-term debt in July. Yet that buying turned to selling in August and moderated last month as derivatives used to swap US debt back into Japanese yen have become more costly.

    In Germany and the UK the benefit of buying higher yielding Treasury debt has been almost entirely eradicated once the cost of basis swaps is factored in.

    One question now is at what level of yields is needed to tempt these buyers back.

    ‘’We need higher yields to really attract the marginal investment dollar from Japan,” says Tom Hartnett, head of fixed income trading at Mizuho, a Japanese bank. He hazards 2.6 per cent to be the key threshold. “It’s all about relative value,” he adds.

    Yet at the same time, domestic demand for Treasuries has remained strong, backed by inflows into bond funds. US bond funds absorbed $44bn of fresh money in August, according to data from the Investment Companies Institute, with weekly data from EPFR Global showing the trend lasting in September.

    “Domestic accounts have, for the moment, taken over the role as the initial buyer in the market,” says Ian Lyngen, head of US rates strategy at BMO Capital Markets. “Whereas until recently foreign investors were the go to buyer.”

    Those buyers maybe drawing some succour from the inflation picture in the US, where the level of consumer prices remains shy of the 2 per cent level targeted by Fed policymakers. The reading in August for core personal consumption expenditures fell to 1.3 per cent compared with a year ago, the lowest for the central bank’s preferred measure of inflation pressure since late 2015.

    “There is more downside risk to inflation and it drives yields down,” says William Irving, a portfolio manager at Fidelity. “I just don’t think interest rates can sell off that much more, unless we get a change in the inflation dynamics.”

    Foreign investors, and especially those from Japan, are well-known for owning longer-dated holdings, whose value is more susceptible to any acceleration in inflation. Over the past month, the move higher in yields has been accompanied by an upward shift in break-even inflation rates, a market measure of inflation expectations.

    Nick Gartside, chief investment officer for global fixed income at JPMorgan Asset Management, says fundamental factors such as Fed policy and tax reform will probably drive sentiment for the Treasury market, but how foreign buyers react will be key.

    “The degree of foreign buying will determine where precisely we end up,” he says.

    Última edição por 5ms; 02-10-2017 às 13:20.

  8. #8
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010


    James Skinner
    12 September 2017


    Strategists at Deutsche Bank coined the term “Zombification” to describe a phenomenon where markets have been seen refusing to price additional rate hikes from the Fed into fx and bond markets.

    “This is not about whether the FOMC will raise rates in December but a broader question of what will happen beyond,” says George Saravelos, a foreign exchange strategist at Deutsche Bank. “There are many important changes at play that suggest “zombification” is likely to continue.”

    Saravelos flags the changing composition of the Federal Open Market Committee, which will see President Trump nominate a number of candidates for the committee over the coming months, as a factor behind why markets wont bet on further Fed tightening. It isn’t possible to know who future members are and therefore, to predict how the FOMC will be likely to vote at future meetings.

    “Whoever is appointed, there may be a high bar for making big policy change in H1 of next year,” Saravelos says.

    Market implied path of Federal Funds Rate and US holdings of foreign Treasury securities. Source: Deutsche Bank research report.

    The Deutsche Bank number-cruncher also notes the Federal Funds rate is already nearing its likely peak for the current cycle, so will be less reactive to further hikes anyhow, while flagging a further fundamental shift in foreign exchange markets.

    “It is no longer been driven by relative monetary policy expectations but an adjustment to flow imbalances that have built up through the implementation of highly unconventional global monetary policy,” Saravelos says.

    The greatest consequence of post-crisis monetary policy, and even the crisis itself, has been a so called “structural underweight” in Euro area assets which is now in the process of being reversed.

    “We struggle to identify conditions that would sustainably shift the dynamics described above and would not fade recent dollar weakness,” Saravelos concludes.


    Trump stepping up search for next Federal Reserve chair

    Oct 02, 2017

    Investing.com - U.S. President Donald Trump is stepping up his search for the next chair of the U.S. Federal Reserve.

    Trump held meetings with former Fed Governor Kevin Warsh and current governor Jerome Powell as well as two others last week and said Friday he would make a decision within the next two to three weeks.

    Current Fed Chair Janet Yellen is also in contention. Her term as chair is due to expire in February of next year.

    Trump criticized Yellen during his presidential campaign, accusing her of keeping interest rates low to prop up the economy under former President Barack Obama.

    Yellen’s chances of remaining in the top job appeared to improve after Trump’s relationship with Gary Cohn, the director of the National Economic Council, soured.

    Cohn had been seen as a leading contender for the job until the former Goldman Sachs president criticized Trump’s remarks about violence in Charlottesville, Virginia, last month.

    A new Fed chief would take the helm as the central bank reduces its $4.5 trillion portfolio and as interest rates continue their gradual climb back towards historical norms.

    Última edição por 5ms; 02-10-2017 às 13:41.

  9. #9
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    EUR/USD Trade Goes Wrong

    The Dollar's recovery has been stronger than expected bemoans UniCredit strategist

    Joaquin Monfort
    28 September 2017

    Strategists at UniCredit Bank have confirmed they have exited a trade that sought to take advantage of further gains in the Euro against the Dollar.

    The trade was closed following a bout of unexpected Dollar strength that pushed EUR/USD below levels which strategists were no longer confortable staying in the market, yielding a loss of 1.55%

    "We have been caught wrong-footed by this USD rebound. We thought that the Dollar rally would be briefer and shallower. As things currently stand, USD appreciation has extended beyond what we were expecting," says UniCredit's Co-Head of Strategy Research & Head of FX Strategy Research, Dr. Vasileios Gkionakis.

    Why has the recommendation that sought to benefit from further Euro strength and Dollar weakness failed?

    Firstly, 'Dollar shorts' had been very stretched across the board, and although there is not very strong evidence of a contrarian pull-back from extreme positioning in USD, it seems in this case the extreme oversold conditions of the currency probably caused a 'short-covering' effect.

    Short-covering is when a lot of traders have sold short a currency which unexpectedly bottoms and bounces.

    During the bounce the traders holding the shorts get worried and decided to close their positions, which in trading lingo is called 'covering shorts'.

    Often executed in a panic as prices rise and traders see their positions rapidly turning from profit to loss, short-covering adds impetus to the early stages of an uptrend.

    The second reason for the Dollar's strong recovery is "dollar bulls getting somewhat excited about tax reform," says Gkionakis.

    However, he remains skeptical on tax reform saying the evidence from past performance at implementing policies does not hold out much hope for this one in particular.

    In addition, there is a massive question mark as to where the money for the tax cuts will come from.

    "Even if a very comprehensive plan were to be announced, nothing would guarantee its final shape, let alone approval by Congress. And in reality, financing a sizeable corporate tax cut to 15-20% alongside substantial relief for households is a significant challenge – to say the least – especially following the “fiasco” of the attempts to repeal and replace Obamacare," said Gkionakis.

    Yet since all of Trumponomics has now been priced out of USD there is a risk that some of it could get priced back in.

    Finally he sees market repricing of the more hawkish Fed which is more confident of raising interest rates in December.

    Nevertheless there is a limit to how much higher the Dollar is likely to go as a result of tighter policy.

    The US Dollar is already overpriced compared to the level attributable to real yield differentials and the Fed would have to pursue an exceptionally aggressive tightening policy for them to catch up.

    Even their current more-hawkish approach is not aggressive enough to warrant the level of the Dollar, so there is actually a risk the currency could weaken, however, Gkionakis says this is overshadowed by the "confluence" of other factors supporting the Greenback.

    "So near-term USD gains could well continue. However, we maintain the view that we have not seen the end of the dollar’s (long overdue) downward correction, especially now that flows seem to be returning to the euro area. The implementation of substantial US tax reform represents currently the main risk to our view.," he concludes.

    Market Distortions Supporting the Dollar

    The Dollar is also gaining support from another less likely source accorrding to the original ideas of one particular analyst Commerzbank's Ulrich Leuchtmann, and that is inefficiencies in the Forward FX market.

    The inefficiencies mean that there is a loophole which traders can use to benefit from a risk free profit from the carry advantage of a currency swap because forward contracts are not priced properly.

    The inefficiency, allows traders to conduct profitable, risk free, interest rate arbitrage in EUR/USD (but also other EUR pairs) which favours Dollar holdings and leads to downwards pressure on the exchange rate, says Leuchtmann:

    "There is increasing evidence that this distortion of the forward market is also having an effect of the spot market. The explanation is simple: Due to a falling EUR-USD basis the carry advantage of EUR-USD shorts is increasing."


    15:01:11 GMT - Real-time Data
    Última edição por 5ms; 02-10-2017 às 14:10.

  10. #10
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    It is getting tougher to argue that the bull market is near its end

    “The best reason to be bearish is there is no reason to be bearish.”

    Chris Dieterich
    Oct 2, 2017

    In September, U.S. stock benchmarks faced numerous rally-threatening obstacles, from the Federal Reserve’s decision to reduce its balance sheet to escalating rhetoric between the leaders of North Korea and the U.S.

    Even so, unruffled investors pushed the S&P 500 to its 39th record of the year Friday, as The Wall Street Journal’s Morning MoneyBeat newsletter noted. For 2017, the index is up 12.5% after rallying 4% in the third quarter.

    Resilient as stocks have been, markets hardly look toppy. A strengthening global economy has bolstered corporate earnings. Rather than dump money heedlessly into stock funds, investors are buying investments such as high-grade corporate bonds. Some $23 billion moved out of U.S. equity funds in the third quarter, while $68 billion went into investment-grade corporate bond funds, according to Bank of America Merrill Lynch.

    “I find a surprising lack of optimism about the outlook for equities,” wrote Byron Wien, vice chairman at Blackstone Advisory Partners, a subsidiary of the Blackstone Group. “The usual factors that warn of a bear market or recession are not evident.”

    Sure, there are a number of nagging concerns, but few obvious catalysts to derail the bull market in the coming months. Topping the list of worries for most investors is how central banks will normalize monetary policy after years of extraordinary measures.

    But even that is unlikely to upend the bull market soon. Central bankers have mostly telegraphed their next moves. Financial conditions have been easing and economic growth in developed economies looks sturdy. That suggests any market impact may not materialize for months. And it will likely take a few more interest rate increases in the U.S. before costlier borrowing affects the economy or challenges the notion that, for investors, there are few alternatives to owning stocks.

    Another threat is that inflation perks up and triggers hawkish central bank policy, roiling bond markets. This too seems distant, as the Fed’s preferred consumer price gauge Friday clocked in well below the 2% target.

    While the S&P 500’s price-to-earnings ratio has been elevated for years, using valuations to time the market is notoriously fraught.

    Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, has for months called for a final melt-up rally in risky securities before the market rolls over in spectacular fashion. While he still thinks this scenario will play out, he summed up the current state of markets concisely last week, stating that most investors probably want to stand pat until the path becomes more clear:

    “The best reason to be bearish is there is no reason to be bearish.”


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