US Economy

7

Australian dollar whacked as Fed hawk rises

DXY lifted last night and is nicely placed for an inverse head and shoulders bottom (which is meaningless unless it happens): AUD was thumped against DMs: And mixed against EMs: Gold was hit: Brent jumped on Kurdish and Iran tensions: Base metals were mixed but copper went stupid: Big miners were strong: EM stocks stalled:

0

More record highs for stocks

DXY pulled back last night: AUD stabilised versus EMs: But fell against EMs: Gold held: Brent was whacked: Base metals rallied: But not big miners: EM stocks held: High yield is stable: US yields pulled back: European spreads contracted: And US stocks hit more record highs: It’s a pretty normal pullback following Trump tax excitement. There’s

7

Goldman on the new Fed doves

Via Goldman: We expect the FOMC to officially announce … that balance sheet runoff will begin in October. As the Fed has already communicated extensively about its plan for a gradual and predictable runoff, we expect markets to focus instead on the outlook for the federal funds rate. The key question is whether the committee’s expectations

7

How’s Donald Trump 2.0 treatin’ ya?

Via the FT today: Donald Trump’s debut address to the UN General Assembly on Tuesday morning is expected to set out a nationalistic foreign policy based on “sovereignty” and which pulls back from any vision of America as an overseas nation-builder and singles out North Korea and Iran as “rogue regimes”. A senior White House

2

Is the US economy sinking like its dollar?

DXY rebounded from its free fall Friday night: AUD also dropped its tearaway gains though remains at new highs: It was strong against EM: Gold is near break out but also reversed: Brent was hit as US stocks build: Base metals were dumped as China reversed the yuan rise: Big miners too: EM stocks eased:

15

Fed hikes swept away in hurricanes?

Via Karen Moley: … economists warn the US central bank will have no option to shelve any plans for hiking US interest rates this year to compensate for the hit to US economic activity after Harvey shuttered businesses and made it impossible for people to get to work. Some estimate that Harvey could slice as much as 1.5 percentage points off US GDP

7

Would you invest with Glenn Stevens?

Via the AFR: Former Reserve Bank governor Glenn Stevens has taken on a role as an advisor at Ellerston Capital’s new global macro fund. Mr Stevens, who retired from the central bank one year ago, will take a permanent role on Ellerston Global Macro’s Investment Counsel and will provide insights to the fund’s portfolio managers on

1

Previewing US jobs

by Chris Becker The northern hemisphere summer has ended and with it the most important economic release on the calendar is coming. Tonight’s US monthly non-farm payrolls report will be closely scrutinised and acted upon by risk managers as it sets the gauge for markets for the month to come. Following the stonking GDP print

1

USD driving metals rocket

Morgan Stanley is right today: Since mid-June, commodity price performances have been dominated by a currency trade. So what events could terminate this driver? Currencytrade, mostly: Over the last 8-10 weeks, ithas been increasingly difficult for us to identify the fundamental basis of the general lift in commodity prices (now >15-40% since mid-June). Yes, prices

2

US dollar plunges

DXY continued its swan dive last night: There’s so real support on that chart until around the 87 cents area… The EUR roared: Aussie jumped against USD, fell against EUR: It was not as strong as EMs: Gold confirmed the DXY break: Brent slumped as US petroleum is hammered by Hurricane Harvey: Base metals fell

4

Wrapping Jackson Hole

Via Westpac’s Elliot Clarke: The Jackson Hole Symposium has become a key event in the global economic calendar, having acted as a pivotal point for US monetary policy on a number of occasions. Come 2017, with FOMC Chair Yellen and ECB President Draghi both speaking, market participants again paid close attention. In the event, monetary

5

Are we past the Trump nadir?

DXY rebounded last night: AUD fell against it but rise against EUR: It fell against EMs: Gold held at the highs: Brent held at the lows: Base metals are still rising for no apparent reason: EM stocks took off: High yield too: US yields rose: And European, especially Italy: Stocks soared: Welcome to the Trump

5

Markets firm as Trump sloughs Jacksonian trappings

From WaPo: President Trump outlined a revised vision for the U.S. war in Afghanistan on Monday, pledging to end a strategy of “nation-building” and instead institute a policy aimed more squarely at addressing the terrorist threat that emanates from the region. “I share the American people’s frustration,” he said. “I also share their frustration over

1

A peak inside the Jackson Hole

Via Goldman: The key development in Federal Reserve communication last week was a wide-ranging interview with FRBNY President Dudley. Two quotes in particular stood out to us. First, Dudley suggested that so far he has not changed his “dot”; if things go as planned then he “would be in favor of doing another rate hike