Ricky Cove

The consumer price inflation (CPI) data reported on Thursday indicated an increase of 0.4% in August. The year-over-year rate improved from 1.7% to 1.9% for August.

The European bond market’s reaction to the ECB’s (European Central Bank) September 7 statement has so far been positive.

In its September 7 policy meeting, the ECB (European Central Bank) downgraded the outlook for the EU economy’s inflation.

In its September 7 meeting, the ECB (European Central Bank) governing council sounded optimistic about the strong growth momentum in the EU.

As per the latest JOLTS report, about 3.2 million Americans quit their jobs voluntarily last month. This is an increase of 0.1 million from the previous month.

The Japanese yen gained ground against the US dollar last week, closing at 107.8 against the US dollar, which appreciated 0.56%.

The British pound (FXB) appreciated against the US dollar for the week ended September 8, 2017. The pound closed at 1.32, appreciating 1.9% against the US dollar.

The US Dollar Index (UUP) failed to hold onto its gains from the previous week as investors were convinced that the Fed most likely wouldn’t make any changes to its monetary policy this year.

The euro closed the week ended September 8, 2017, at ~1.20 against the US dollar. It rose 1.48% against the US dollar as euro bulls took charge.

This week volatility (VXX) has continued to stick to its trend of sudden spikes and then dropping immediately.

The key reason for the debt ceiling deal was to approve aid to Hurricane Harvey victims. A US government shutdown could have adversely impacted relief operations.

The US Federal Open Market Committee (or FOMC) is scheduled to meet on September 19 and 20 to discuss the current economic climate in the US and to decide whether any monetary policy adjustments are necessary.

The governing council of the European Central Bank (or ECB) is scheduled to meet on September 7 in Frankfurt, Germany. The meeting will be followed by a press conference.

August was a volatile month, filled with economic, political, and geopolitical uncertainty. September could turn out to be another nail-biter for the financial markets.

The British pound (FXB) appreciated marginally against the US dollar for the week ended September 1, 2017.

The US Dollar Index (UUP) surprised the markets with its resilience despite a weak August jobs report.

The euro (FXE) closed the week ended September 1, 2017, at 1.19 against the US dollar (UUP). It lost 0.56% against the US dollar.

Stanley Fisher, vice chair of the U.S. Federal Reserve, has shared his views on low interest rates and some solutions to get rates back to normal levels.

In its latest monetary policy statement, the Fed admitted it would take longer than expected for inflation to reach its 2.0% target.

The Fed, in its efforts to normalize policy, announced that it is starting the balance sheet unwinding program soon.

In the last few months, the performance of the US economy has been impressive. The unemployment rate fell to 4.3% in August.

Volatility in the currency markets spiked after news of the North Korean missile launch on August 29. Demand for safe haven currencies like the Japanese yen (FXY) and Swiss franc (FXF) picked up in the Asian session.

In the financial markets, there are a few financial assets whose demand increases dramatically in times of uncertainty.

Renewed tensions arising out of North Korea’s missile launch on Tuesday had a major impact on volatility. Asian markets have declined more than 1% as risk aversion dominated markets.

Consumer expectations for business conditions Consumer expectations form the only component of the Conference Board Leading Economic Index (or LEI) based on business expectations. Referring to consumer expectations regarding future economic conditions, their measurement is an average of two surveys. One survey, conducted by the Conference Board, records consumer expectations for business conditions six months […]

Understanding the Leading Credit Index The Conference Board Leading Credit Index (or LCI), which tracks lending conditions in the economy, is reported monthly. The index has six constituents: 2-Year Swap Spread (SHY) (real time) LIBOR[1.London Interbank Offered Rate] 3-month (SCHO) less 3-month Treasury-bill (VGSH) yield spread (real time) debit balances in margin accounts at broker dealers […]

The risk scenario The S&P 500’s rally has stalled just shy of 2,500. Investors are drawn to to riskier assets such as equities when they expect further expansion in the economy. The S&P 500 (SPY), which comprises the 500 largest stocks in the United States, is a constituent of the Conference Board Leading Economic Index […]

The British pound (FXB) remained unchanged against the US dollar for the week ending August 25. The pound (GBB) closed the week at 1.2887.

Any negative news from the jobs report will be foreshadowed by the tax reform news. It’s the last jobs report before the September FOMC meeting.

The US Dollar Index closed the week ending August 25 at 92.68—compared to 93.36 in the previous week.

European Central Bank President Mario Draghi gave didn’t comment about removing monetary stimulus in his speech at the Jackson Hole symposium.

Reduced odds for another rate hike in 2017 Fears of flattening yield curves and rising interest rates have completely vanished in recent weeks. The FOMC’s (Federal Open Market Committee) July meeting statement confirmed the concerns about lagging inflation (TIP), making another rate hike in 2017 less likely. Focus has turned to the Fed’s balance sheet reduction […]

A failure to raise the debt ceiling will likely result in a US government shutdown and a default by the US, which would be catastrophic for the global economy and financial markets (VTI) (USMV).

The US debt-to-GDP ratio now stands at 106.1%, which means that the total US debt is more than the annual US GDP.

This year’s theme for the annual Jackson Hole Symposium is “Fostering a Dynamic Global Economy.”

ECB President Mario Draghi is scheduled to speak at this year’s Jackson Hole Symposium on August 25—after a hiatus of three years.

The key risk faced by bond markets is a sudden fall in prices.

In this cycle of expansion after the great recession, the Fed has started the process of monetary tightening.

In the recent Bank of England (or BOE) policy meeting, interest rates were left unchanged at 0.25%.

If the European economy continues to improve at the current pace, the QE program could be scaled down to 40.0 billion euros per month.

The last two weeks have been eventful for financial markets (SPY).

The British pound (FXB) was one of the worst performers in the week ending August 18.

The euro-dollar pair (FXE) closed the week ending August 18 at 1.18 against the US Dollar (UUP).

In its June meeting, FOMC (Federal Open Market Committee) members detailed plans to shrink the $4.5 trillion balance sheet.

Members of the FOMC (Federal Open Market Committee) attributed the recent slowdown in inflation growth to idiosyncratic factors.

In his speech on August 10, New York Fed President William Dudley joined the group of FOMC members to ease concerns about slowing inflation (TIP).

The Japanese yen (JYN) was back in demand as geopolitical tensions took center stage last week.

Equity markets in the US and across the globe reported heavy losses as risk aversion set in.

The British pound (FXB) had another negative week as a dovish statement from the Bank of England continued to drag the currency lower.

Bonds, especially U.S. Treasuries (GOVT), are considered one of the safest assets in which to park your funds in times of uncertainty.