The ECB delivered a bigger-than-expected increase in its QE programme (PEPP). The dollar has weakened further and John Butler writes on how this could continue. Caroline Grady writes on the ECB’s decision. Meanwhile, Dominique Dwor-Frecaut argues that China no longer needs the Hong Kong dollar.
I look into past US protests and find the latest unrest could have its biggest impact on the Presidential election, rather than on markets. Already our election tracker is finding Trump’s odds are falling. John Tierney looks under the hood of US labour market data and argues its all about temp vs permanent workers.
Finally, rates guru George Goncalves gets into the plumbing of Fed policy and argues how net liquidity will fall and pressure rates.
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The ECB delivered a bigger-than-expected increase in its QE programme (PEPP). The dollar has weakened further and John Butler writes on how this could continue. Caroline Grady writes on the ECB’s decision. Meanwhile, Dominique Dwor-Frecaut argues that China no longer needs the Hong Kong dollar.
I look into past US protests and find the latest unrest could have its biggest impact on the Presidential election, rather than on markets. Already our election tracker is finding Trump’s odds are falling. John Tierney looks under the hood of US labour market data and argues its all about temp vs permanent workers.
Finally, rates guru George Goncalves gets into the plumbing of Fed policy and argues how net liquidity will fall and pressure rates.
Enjoy!
Bilal
The Dollar Has Peaked – Part I (5 min read) The past week has seen a sharp decline in the US dollar, both versus major currencies and in broad, trade-weighted terms. While this could be a mere technical pullback, I believe there is a strong possibility that this is the beginning of a large move of 10% or more. While that would be a sizeable decline, it is hardly without precedent…
(John Butler | 4th June, 2020)
ECB Delivers By Upsizing PEPP (2 min read) Today’s increase in the size of the ECB’s pandemic emergency purchase programme (PEPP) adds another layer to Europe’s response to the COVID crisis. This comes on top of additional and significant fiscal stimulus in Germany and the earlier proposal for coordinated support via an EU Recovery Fund…
(Caroline Grady | 4th June, 2020)
China No Longer Needs HKD (3 min read) The HKD peg to the USD is central to Hong Kong’s role as a global financial centre. This role has served the mainland well after the 1997 handover but more recently has become less relevant to its economic and financial strategy. As a result, the HKD peg and full convertibility could become casualties of the growing tensions between China and the US, and the HKD could get repegged to the CNY…
(Dominique Dwor-Frecaut | 4th June, 2020)
Markets Ignoring Protests, But Trump Shouldn’t (5 min read) Unrest. Looting. Rebellion. Riots. All these terms and many more dominate news headlines as protests erupt across the US following the tragic killing of George Floyd by police officers in Minneapolis. Hopefully, the protests won’t distract from the urgent need to address the underlying issues that lead to such killings…
(Bilal Hafeez | 4th June, 2020)
When Temporary Unemployment Turns Permanent (3 min read) The recoveries that followed the recessions of 1992, 2001 and 2008-09 have often been called ‘jobless recoveries’. This was a term coined during George H. W. Bush’s tenure because the labour market was so slow to improve compared with previous recoveries. People have offered a variety of reasons for this phenomenon, including globalization and outsourcing of work, a breakdown in union power, and the steady shift from manufacturing to a services-based economy…
(John Tierney | 4th June, 2020)
US Policy Net Liquidity Challenges And Market Implications (4 min read) With the dust now settled post weeks of massive Fed liquidity injections, I explore the concepts of the Fed’s directive to maintain “market function” and what that means for policy and markets ahead. Clearly the rate vol in March was amplified by broader cross currents impacting all markets into the COVID-19 lockdowns. However, the issues that have been plaguing the bond market actually started in 2019…
(George Goncalves | 4th June, 2020)
US Election Tracker – A Tumultuous Week President Trump’s heavy-handed approach to the unrest that has erupted across the US in the past week is now a key election topic. His stance contrasts sharply with the conciliatory approach of Joe Biden and is bringing the country’s divisions to the forefront once again. Trump’s popularity had been falling since the April high and, surprisingly, has not moved much in the past week albeit remaining towards the lower bound of the recent range…
(Bilal Hafeez | 4th June, 2020)
Global COVID-19 Tracker: Sweden Scales Up Tests, Brazil Deaths Spike And Spain Extends Emergency In the DM world, apart from Sweden which recorded a 6% increase, no country saw big case increases. Sweden’s increase is likely the result of a scaling up in testing capacity recently put in place. Sweden also tops in deaths with a 2% increase, while others barely saw any increases. Even if its overall increases are currently low, Spain decided to extend its emergency until June 21…
(Bilal Hafeez, Stefan Posea | 4th June, 2020)
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)