Monday, January 23, 2017

"...the Fed's 'cone of silence' descends ahead of next week FOMC meeting"

From Marc to Market:
The US dollar had a poor close in the North American session before the weekend as investors appear increasing anxious about the new US Administration's economic policies and priorities.With no fresh details emerging over the weekend, some stale dollar longs exited.  The dollar stabilized in the European morning, but broader risk appetites were not rekindled, and the Dow Jones Stoxx 600, led by financials, was sold to its lowest level this month. 
Asian shares did better, with the MSCI Asia Pacific Index snapping a two-day decline by rising nearly 0.2%.  However, Japanese shares were heavy, and the three-day rally in the Nikkei and Topix ended with 1.2%-1.3% loss, the second biggest this month.  

All sectors were lower, and although some report suggests exporters were the hardest hit, which may be the telecoms on the Topix and consumer discretionary on the Nikkei, the real estate sector in both indices were down nearly as much.   Moreover, other markets that might suffer from the shift represented by Trump's "America First" rhetoric, including China, Taiwan, South Korea, and Singapore markets rose.  

Bond markets are mostly firmer.  The US 10-year yield is increased by over 20 bp last week, though pulled back in late pre-weekend activity to finish a little below 2.47%.  Today it fell below 2.43% before steadying in Europe.  European bond yields are mostly lower.  Italy and Portugal are lagging.  British, German and Swedish 10-year yields are off two basis points....
...The new week has begun off with a little fresh news.  It does not get better in the US today.  There are no economic reports, and the Fed's 'cone of silence" descends ahead of next week FOMC meeting.  While some may see a new era in reports that Foxconn, the manufacturer, is considering teaming up with Apple to build a $7 bln display factory in the US, news of the first drone strike (in Yemen) under President Trump suggests some elements of continuity....