After four calendar years of price appreciation, it looks like the US dollar will end 2017 deeply in negative territory. The dollar has fallen by almost 12% this year versus the euro and around 8% on a trade weighted basis. More surprisingly, the sharp depreciation of the dollar against the euro has occurred in a period when central bank policy has diverged, resulting in the yield differential …Read the article
- The Fed Chair choice should be obvious for Trump. Yellen all the way. I don’t understand why he would choose Taylor.
President Trump is likely to announce his choice for the next Fed Chair by the end of this month. Whilst current Chair Janet Yellen is still in the running, she has been slipping down the betting over the past few weeks. There are three good reasons why (from his perspectiv…Read the article
I’m just back from a fascinating research trip to Mexico City, to meet with policymakers, bankers, politicians, analysts, pension funds and regulators. Like many emerging market economies, the Mexican economy has suffered over the past couple of years due to lower commodity prices and weak global demand for goods. Of course, Mexico has had its own unique challenge with Donald Trump’s election…Read the article
Heated debates about proposals to repeal and replace Obamacare, generic pharmaceuticals feeling the pain of pressures on drug prices and lingering event risk around potential mergers and acquisitions – there are many reasons to take a closer look at the US healthcare sector right now. On my recent research trip to Chicago I discussed these and other topics with Laura Reepmeyer, Managing Directo…Watch the video
Despite US rate hikes in December, March and another last week, the US dollar has depreciated back to pre-election levels. All of the Trumpflation dollar premium has disappeared. As the Trump dollar trade appears to have run out of steam, the Euro has however been climbing. Optimism around the Euro area growth comeback grew leading up to the ECB meeting earlier this month, with EUR/USD hittin…Read the article
According to recent reports, leading foreign football players in the English Premier League are looking to get paid in euro rather than sterling. Since the UK referendum result in June last year, sterling has fallen by 12% against the euro, so it is unsurprising to see that some players have questioned the denomination of their salaries. It is not the first time that global stars have asked to …Read the article
The last time the US had an unemployment rate below 5% and inflation expectations around 2%, the Fed funds rate was above 5% and had been aggressively hiked in the preceding period. Yellen’s Fed has been happy to let rates stay low amongst a tight and tightening labour market because wage growth has been lower than one would expect for a jobs market as healthy as this one. So, slow growth of wa…Read the article
Though the recent US Treasury report did not name any country as a currency manipulator (see more details on this in Mario’s blog), the monitoring list centres on larger economies that meet the following criteria:
- The country has a significant bilateral trade surplus with the United States defined as more than USD 20 billion.
- The country has a current account surplus of at least 3% of GDP and …
Switzerland has made headlines of late as a potential candidate to be labelled a currency manipulator by the U.S. Treasury. For those countries at risk, a report recently published by the U.S Treasury sets out three key criteria the U.S. Treasury will use in order to assess whether a country is “pursuing unfair practices”. Firstly, the country would have a significant bilateral trade surplus wi…Read the article
Yields on Canadian sovereign bonds have been dragged higher in recent months, with the yield on the 10-year bond recently reaching 2 year highs. This sell-off appears to reflect the US reflation narrative, rather than the economic fundamentals of the Canadian economy.
The market currently thinks the Bank of Canada will remain on hold throughout 2017, pricing in only one rate hike – a 20 basis …Read the article