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U.S. government debt dropped to the least costly level since March 2011, when measured by real yields and the best relative value compared with German bunds in more than 23 years, after the longest descent in Treasuries in 2013.
Subjected to inflation, 10-year U.S. notes yielded 0.91 percent last week or 1.77 percentage points more than U.K. gilts real yields, the widest spread in over 25 months.
Against Germany, the notes are the cheapest in 23 years when adjusted for the most recent record-low interest rates around the world, which curved the normal relationship.
Treasuries have lost 0.33 percent this year, including reinvested interest, compared with 0.93 percent for the global sovereign bond market, Bank of America Merrill Lynch indexes show.
Treasury 10-year notes fell in each of ...
HIGHLIGHTS OF THE WEEK
United States
Eurozone recession drags on for the sixth consecutive quarter as economic output declines 0.2% in 2013Q1. Growth in France and Italy declined by 0.2% and 0.5%, respectively, while the German economy grew ever so slightly, at a 0.1% pace.
First quarter growth accelerated in Japan as the Abenonomics-inspired yen depreciation fueled doubledigit export growth in the first three months of the year.
Fiscal retrenchment in the U.S., along with some transitory factors, has brightened the deficit outlook. Deficit for FY13 was revised down by $203bn, and looks $618bn lighter for the 2014-23 period.
Domestic data releases came in weak for externally-exposed sectors, but remained robust for the more domestically-oriented ones, with calls for exit from QE growing ...
Recent rallies in Non-USD currencies resulting from poor US data have not lasted long. And those rallies resulting from strong US figures via the indirect effect of rallying equities (risk-on) have not lasted either. Broadening pro-USD sentiment may stay for longer than we had thought as the US dollar index has exited from another 9-year down cycle.
The greenback has primarily been boosted by traders' realization that the Federal Reserve is the central bank most likely to precede its global peers in reducing its asset purchases program, regardless of whether it ends up not maintaining or increasing the program altogether. What matters in currencies are relative expectations, and at the present juncture, the Fed is the most likely to signal a gradual tapering of asset purchases, than other ...
Sunrise Market Commentary
Rates: Global bonds finally react on weaker US data
It took some time, but finally bonds reacted positively to another batch of weaker US data. That may have ended the downward correction that started after the US May payrolls release. However, there is as of yet no reason to become overly bullish for bonds.
Currencies: Dollar ignores poor US eco data
The recent slide of EUR/USD slowed, but the pair failed to profit from a series of poor US eco data. Fed speakers, including governor Williams, continue the debate on the tapering of asset purchases. These expectation are putting a strong floor under the dollar. The trade-weighted dollar is still near the key 84.10 level
The Sunrise Headlines
US equities suffered first losses this week with S&P 0.5% lower. Whereas ...
Is it really the best of a bad lot? Even disappointing PPI and manufacturing data yesterday suggests that the US recovery is somewhat uneven. So far this has not been able to stall the ‘mighty' dollar's rally. The dollar bull continues to rely on the last few weeks' upbeat jobs prints to aid the buck in its quest for higher prices. It was lower energy prices that led US wholesale prices to its biggest decline in the producer price index in more than three-years last month (+0.7%). This would suggest that US inflation is currently a relative non-issue, implying that the Fed has time on its side to continue with its monthly QE program without having to worry about any spike in prices.
In today's reality, a giant wave of disinflation seems to be enveloping the globe. These falling prices are ...
Sunrise Market Commentary
Rates: Core bonds digest losses
Global bonds digested last week losses and corrected higher. They tried to move lower on the back of stronger US retail sales but lacked follow through selling. On EMU bond markets, Spanish and Italian spreads widened, also in a corrective move.
Currencies: Dollar rally takes a breather
Last week, the dollar was in good shape even as there was no high profile news. Yesterday, sentiment clearly changed. The US currency failed to profit from a good US payrolls report. EUR/USD tries to regain the 1.30 mark, while EUR/GBP is testing the 0.8500 resistance
The Sunrise Headlines
US equities were flat on Monday, with the S&P still near the record high. Overnight, Asian equities trade mixed with an outperformance of Chinese equities
...
Singapore is set to become the world’s largest offshore wealth center in terms of assets by 2020, replacing Switzerland.
According to London research firm, WealthInsight, Switzerland is losing its appeal due to tighter banking regulations, especially in the U.S. and Europe
Moreover, the loss of confidence among wealthy American and European investors in bank secrecy laws and independence is also doing Singapore a favor.
“The European crisis undoubtedly has had a big impact on Switzerland because all the European nations now are looking to get back as much as tax as they possibly can from anywhere, and anyone”, said Chris Wheeler from Mediobanca.
There is also a growing number of wealthy Asians who are looking for banking hubs closer to their homes.
This helped Singapore to become the ...
Title:
The Week Ahead : 11/05/2013
Highlights
FX return analysis
Fundamental Focus: Europe
Another leg lower for JPY as Japanese investors seek yield
What recent US data means for the buck
FX return analysis
It was a wild ride for FX markets at the end of last week. The dollar surged, the yen slumped and some G10 crosses breached key technical levels. Volatility also picked up, 1-month implied volatility in JPY jumped from 11.98% on 2nd May, to 12.95% on 10th May. Other currencies that were notably more volatile last week versus the dollar include NZD and the AUD.
The dollar has been by far the strongest performer in the G10 over the past month, while the Aussie has overtaken the yen as the weakest performer versus the USD over the past month. The yen jumped ahead of the CHF, NZD and SEK, who all performed worse than the ...
European stocks were off to a mixed start on Thursday trading as investors cautiously stayed on the sidelines ahead of BOE’s key rate decision, while gains among corporate earnings dominated the trading sentiment across the region.
- STOXX Europe 600 inched down 0.07 percent or 0.21 points to 303.46
European shares opened slightly lower on Thursday with investors taking a breather after a sharp rise that took key indexes to multi-year highs.
Stoxx Europe 600 equity benchmark rallied earlier in the week to its highest since June, 2008 on solid corporate earnings, while Wall Street’s Dow Jones Industrial Average jumped closing above 15,000 for the first time.
- French CAC 40 edged 0.74% lower to 3,326.94
- British FTSEE 100 rose 0.07% to 6,588.37
- German DAX gained 0.06% to 8,254.52
...