We got the latest inflation print from Japan overnight. And once you strip out the effects of the VAT hike last year, CPI inflation less food (the version the BoJ target) has fallen to zero in February. Similarly, the ex-food and energy series has also fallen to zero, but somewhat less quickly. The stated aim … More BoJ: one chart says a lot
A slightly different topic to the usual today, sparked by the recent string of comments from the central bank policy world about risks of increased market volatility, in particular in fixed income (FI). For example, the BoE’s Financial Policy Committee (FPC) said in their latest meeting statement earlier today (here) that: The Committee remains concerned that … More Fixed income market (il)liquidity
I argued after the BoE’s February Inflation Report that they were closer to hiking than you might think (here). Since then market pricing has seen the expected timing of the first rate hike get pushed further out to around Sept/Oct 2016, from around April 2016. So what has happened in the past three weeks, and should … More Trade idea: sell short sterling from Dec-15 out to Jun-16
Andy Haldane, the BoE’s Chief Economist, gave a rather extraordinary speech yesterday (here). What was so extraordinary about it was just how off-message it was compared to the recent Inflation Report (which he oversees), MPC minutes and comments from Governor Carney at TSC. The MPC set-up not only allows for, but through the parliamentary process … More BoE: is a rate cut “extremely foolish” or even-money?
So I have spent the past day or so trying to get my head around what Yellen and the FOMC were trying to achieve on Wednesday. It certainly wasn’t the massive volatility that followed in the FX market after the announcement and into Thursday. Once again, lack of liquidity and extreme positioning seems to have … More FOMC: looking to the BoE playbook of ‘gradual and limited’?
So while everyone was focusing their attention on the outcome of the Fed meeting later today, the Swedish Riksbank managed to surprise everyone this afternoon (except Swedbank apparently) by cutting their policy rate to -0.25%, from -0.1% and increasing the size of sovereign bond purchases. This was not a scheduled policy meeting, the next of which is … More Riksbank: And for my next trick…
All eyes this week will be on the FOMC statement, forecasts and press conference on Wednesday. While the first quarter has been a little disappointing on the activity front, the labour market continues to power ahead (although wages growth remains sluggish), and both core inflation and survey measures of inflation expectations have remained fairly stable. In … More FOMC: the path to policy normalisation
One of my frustrations with the financial markets is the unwarranted importance attached to certain data releases. I think the prime example of this is US retail sales. This has to be one of the most closely watched/anticipated data releases each month, and often results in material market moves on the day depending on whether … More US data primer: the retail sales myth
Following on from my “parity party” post, I have done a bit more thinking on euro. And maybe I am getting caught up in the hype. Here are a few charts maybe make the case for parity (or worse) a little tougher. Much of the focus is on relative monetary stance of the US and … More Euro: more thoughts on euro weakness
After a bit of a pause in February, the euro has once again started falling, following the start of sovereign bond purchases by the ECB and yet another strong US non-farm payrolls print. So just how low can it go? I see plenty of analysts calling for 105 or lower by the end of the … More Euro: when should we book the parity party?