Back

Forex Flash: G-20 impact will be fleeting - BTMU

Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ notes that the Yen has strengthened further during the Asian trading session ahead of the G-20 gathering today in Moscow.

He notes that Bloomberg has reported after obtaining a draft of the communiqué that there will be a pledge to “refrain from competitive devaluations” – nothing new and along the lines of the G7 statement earlier this week. He notes that the statement apparently also includes a pledge to monitor “possible monetary policy spill-over”, which would be something new. Including this in the wider G-2O statement does make sense from the perspective of many member countries have for some time been highly critical of the fallout from QE from the Federal Reserve.

However, despite the spotlight on the statement today and the potential short term volatility, he asks, “Is it worth the paper its written on?” The Federal Reserve is planning a USD 1.0 trillion balance sheet expansion this year, the BOJ are of course expanding QE also, the BOE may well return to the policy of QE while the Brazilian authorities have been actively controlling its currency in order to maintain competitiveness.

Halpenny asks whether anything will change after the release of the today’s statement? He writes, “Most likely not! If there is any change it won’t be in policy or actions but possibly rhetoric. Japan is likely to be more cautious in commenting on the yen ahead of the announcement of who the LDP is planning for the three key posts at the BOJ.”

He continues to add, “Your Party opposition to Kuroda and Muto means if the LDP wants either of those candidates or any other ex-MOF official the government must hope for DPJ divisions in the Upper House. Otherwise a different candidate – like Kazumasa Iwata – may be preferred.”

However, he finishes by noting that the impact of the more aggressive Iwata may have been diluted somewhat by the G-7 statement which included a pledge only to use “domestic securities” to implement domestic policies. he writes, “Reuters has reported today that Muto is now the preferred candidate. Whatever the outcome, we suspect the yen could advance further, with USD/JPY moving back below the 90.00 level.”

Forex Flash: Analyzing the impacts of bond yields on equities – Goldman Sachs

One of our most frequent topics of discussion with investors currently is the impact of rising bond yields on equities. According to the Economics Research Team a Goldman Sachs, “In examining the relationship between rises in bond yields on equity prices and sectors, we see the early rises in yields from recent record low levels as benign for equities. In our view bund yields would need to rise well over 3% before they became a major threat to equities so long as inflation expectations remain stable. Cyclicals tend to perform best with steeper yield curves and higher yields.”
مزید پڑھیں Previous

European markets down on calls for less attention to fiscal and monetary stimulus

The German DAX 30 (-0.25%), the French CAC 40 (-0.20%), the Italian FTSE MIB (-0.15%) and the Spanish IBEX 35 (-0.56%) are edging lower on Friday like most European equity indexes, as well as futures for the American S&P 500, Nasdaq 100 and Dow Jones 30 that signal a lower opening by 10-15% ahead of the NY session and consumer confidence and industrial production data releases.
مزید پڑھیں Next