Bottom-line: Dollar Enjoying Strong Follow-Through in Asia’s Morning.
Jackson Hole’s impact on the dollar is carrying through into Monday morning, weighing on key currencies in Asia. CNH has weakened through 6.90 against USD, an important intermediate step to 7.00. The latter would be a game-changer for local markets given the importance of trends for the yuan, and impact it would have on exchange-rate expectations. The PBOC might be moved to resist through a stronger-than-consensus official fixing rate.
Jackson Hole’s impact on the dollar is carrying through into Monday morning, weighing on key currencies in Asia. CNH has weakened through 6.90 against USD, an important intermediate step to 7.00. The latter would be a game-changer for local markets given the importance of trends for the yuan, and impact it would have on exchange-rate expectations. The PBOC might be moved to resist through a stronger-than-consensus official fixing rate.
Bottom-line: 레버리지 펀드들의 달러 순매도 포지션이 2021년 7월 이후 다시금 구축되었지만 달러지수는 +1.6% 상승함. 그 중 가장 큰 규모는 파운드 매수/달러 매도인데, 이 포지션들에서 항복이 나오면 달러를 더 높은 수준으로 끌어올릴 것임. 마침 달러는 중앙은행의 단호한 태도와 금리상승에서 피난처 수요로 힘을 받고도 있음.
Hedge funds may soon revert to dollar longs amid heightened haven bids for the US currency. Leveraged funds boosted bearish bets on the greenback to $458 million in the week ended Aug. 23 via futures based on CFTC data compiled by Bloomberg that cover eight currency pairs and the Dollar Index. This was the first time these funds held net dollar shorts since July 2021. The Bloomberg Dollar Spot Index climbed 1.6% during this period. The biggest dollar shorts were against the pound ($3.27 billion), which were partially offset by longs against the euro ($2.35 billion). As Cormac Mullen wrote last week, there’s everything but the kitchen sink for the Sterling bear case, including deterioration in the nation’s currency-account deficits, stagnant growth and double-digit inflation. That points to possible capitulation of these pound shorts, which could propel the dollar higher. That would dovetail with haven demand for the greenback as the market frets over an even more hawkish Fed and rising US yields.
Hedge funds may soon revert to dollar longs amid heightened haven bids for the US currency. Leveraged funds boosted bearish bets on the greenback to $458 million in the week ended Aug. 23 via futures based on CFTC data compiled by Bloomberg that cover eight currency pairs and the Dollar Index. This was the first time these funds held net dollar shorts since July 2021. The Bloomberg Dollar Spot Index climbed 1.6% during this period. The biggest dollar shorts were against the pound ($3.27 billion), which were partially offset by longs against the euro ($2.35 billion). As Cormac Mullen wrote last week, there’s everything but the kitchen sink for the Sterling bear case, including deterioration in the nation’s currency-account deficits, stagnant growth and double-digit inflation. That points to possible capitulation of these pound shorts, which could propel the dollar higher. That would dovetail with haven demand for the greenback as the market frets over an even more hawkish Fed and rising US yields.
Bottom-line: 잭슨홀 연설에서의 단호함에 따라 평가할 수 있는 한 가지는 현재 주식시장의 변동성이 지나치게 낮다는 것임. 최근 트레이더들은 낮은 변동성으로의 회귀에 베팅하면서 순매도 포지션을 2021년 3월 이후 최대 수준으로 늘렸는데, 잭슨홀 이후 이 포지션들은 해소될 여지가 커보임.
The first takeaway from the aftermath of the hawkish Jackson Hole symposium is equity volatility is just too low. The Cboe Volatility Index may have jumped almost four points as US stocks slumped Friday but it closed just below the 26 level, bang on its average for the year. On top of Jerome Powell’s confirmation that interest rates are going higher for longer -- to break the back of inflation -- there are further catalysts for price swings looming. They include the shutting of the key Nord Stream gas pipeline to Germany for maintenance, a ramp up of the Fed’s balance sheet rundown, crucial US labor data and a slew of central bank speakers Stateside and in Europe. And that’s just over the short term. Speculators have been busy betting against a return of volatility with net short positions on VIX futures at the biggest since March 2021, according to the latest CFTC data. The post-Jackson Hole environment suggests those bets need to be tempered.
The first takeaway from the aftermath of the hawkish Jackson Hole symposium is equity volatility is just too low. The Cboe Volatility Index may have jumped almost four points as US stocks slumped Friday but it closed just below the 26 level, bang on its average for the year. On top of Jerome Powell’s confirmation that interest rates are going higher for longer -- to break the back of inflation -- there are further catalysts for price swings looming. They include the shutting of the key Nord Stream gas pipeline to Germany for maintenance, a ramp up of the Fed’s balance sheet rundown, crucial US labor data and a slew of central bank speakers Stateside and in Europe. And that’s just over the short term. Speculators have been busy betting against a return of volatility with net short positions on VIX futures at the biggest since March 2021, according to the latest CFTC data. The post-Jackson Hole environment suggests those bets need to be tempered.
Bottom-line: 시장 참여자들은 잭슨홀에서 파월이 어느 정도 매파적 입장을 취할 것으로 예상했지만, 그는 예상보다 더 했음. 뿐만 아니라 유럽 또한 인플레이션 통제를 위해 높은 수준의 금리인상을 시사하며 미국 국채 2년물 금리는 2007년 11월 이후 최고 수준에 도달함. 하지만 분석가는 금리가 현재 수준에서 보다 더 상승할 여지가 있다고 봄.
Treasuries sold off in Asia as investors responded to global central bankers signaling they will increase interest rates as much as necessary to bring down inflation. The US two-year yield jumped to the highest level since November 2007 after Federal Reserve Chair Jerome Powell said at Jackson Hole a restrictive stance was likely to remain in place “for some time,” and “the historical record cautions strongly against prematurely loosening policy.” A top European Central Bank official said more tightening is needed even if Europe’s economy tips into recession. “Even though there was an expectation that Powell would be hawkish, he easily exceeded those expectations,” said Andrew Ticehurst, a rates strategist at Nomura Holdings Inc. in Sydney. “I was surprised US rates markets did not move more on Friday night. We retain our view for flatter curves following all the Jackson-Hole communication over the weekend.”
Treasuries sold off in Asia as investors responded to global central bankers signaling they will increase interest rates as much as necessary to bring down inflation. The US two-year yield jumped to the highest level since November 2007 after Federal Reserve Chair Jerome Powell said at Jackson Hole a restrictive stance was likely to remain in place “for some time,” and “the historical record cautions strongly against prematurely loosening policy.” A top European Central Bank official said more tightening is needed even if Europe’s economy tips into recession. “Even though there was an expectation that Powell would be hawkish, he easily exceeded those expectations,” said Andrew Ticehurst, a rates strategist at Nomura Holdings Inc. in Sydney. “I was surprised US rates markets did not move more on Friday night. We retain our view for flatter curves following all the Jackson-Hole communication over the weekend.”
Bottom-line: 유럽 중앙은행 주요 인사들은 인플레이션을 목표치로 최대한 빠르게 되돌리기 위해 최소 지난 번 수준의 금리인상을 할 것으로 강한 의지를 표명함.
The European Central Bank is prepared to at least repeat the half-point increase in interest rates it delivered last month, with an even bigger move not to be excluded as inflation nears yet another record. That’s the message from ECB officials who joined the Federal Reserve’s annual Jackson Hole symposium, which wrapped up Saturday. Fed Chair Jerome Powell set the tone, saying US borrowing costs are headed higher and will stay there “for some time.”. The 11, mostly hawkish, ECB Governing Council members who traveled to Wyoming struck a similar note less than two weeks before September’s policy meeting. Executive Board member Isabel Schnabel, the most-senior ECB official in attendance, urged her colleagues “to signal their strong determination to bring inflation back to target quickly.”
The European Central Bank is prepared to at least repeat the half-point increase in interest rates it delivered last month, with an even bigger move not to be excluded as inflation nears yet another record. That’s the message from ECB officials who joined the Federal Reserve’s annual Jackson Hole symposium, which wrapped up Saturday. Fed Chair Jerome Powell set the tone, saying US borrowing costs are headed higher and will stay there “for some time.”. The 11, mostly hawkish, ECB Governing Council members who traveled to Wyoming struck a similar note less than two weeks before September’s policy meeting. Executive Board member Isabel Schnabel, the most-senior ECB official in attendance, urged her colleagues “to signal their strong determination to bring inflation back to target quickly.”
Treasuries and equities continued to roll downward as traders recalibrated Fed hike expectations. Two-year yields climbed to their highest level since 2007 before steadying around 3.43%, and 10-years gained almost 7 bps to 3.11%. The S&P closed down 0.7%, while the Nasdaq underperformed.
Bottom-line: 인민은행은 위안화 절하의 폭 뿐만 아니라 속도에도 민감한 것 같은데, 지난 4월~5월 4% 수준의 절하 때보다 덜한 상태(2.4% 절하)에도 불구 애널리스트 예상치보다 59pips 더 높은 절상 고시를 하고 있음. 이 정도 차이는 2019년 달러 대비 위안이 7을 넘어섰을 때 강도며, 위안화 약세를 저지하겠다는 강한 신호임.
The People’s Bank of China has sent strong signals that it doesn’t want an excessively weak currency. That shows that Beijing cares as much about the speed of the decline as it does about the actual exchange rate. As the yuan resumed its depreciation after months of stability, the PBOC consistently has set its fixing stronger than analysts expected in recent days. The average deviation between the fixing and analysts’ forecast in Bloomberg surveys over the past five days amounted to 59 pips, the strongest since 2019 when the yuan was trading at more than 7 per dollar. The last time that the PBOC showed a strengthening bias was in late April and early May when the currency fell a record 4% in a month. This time, the depreciation has been more modest – with the yuan falling 2.4% over the past month to 6.9 per dollar. But the fixing support has been stronger than it was in April, suggesting that the PBOC’s tolerance for further depreciation is lower. It shows how there is more sensitivity to the level of the exchange rate as the yuan inches toward 7 per dollar.
The People’s Bank of China has sent strong signals that it doesn’t want an excessively weak currency. That shows that Beijing cares as much about the speed of the decline as it does about the actual exchange rate. As the yuan resumed its depreciation after months of stability, the PBOC consistently has set its fixing stronger than analysts expected in recent days. The average deviation between the fixing and analysts’ forecast in Bloomberg surveys over the past five days amounted to 59 pips, the strongest since 2019 when the yuan was trading at more than 7 per dollar. The last time that the PBOC showed a strengthening bias was in late April and early May when the currency fell a record 4% in a month. This time, the depreciation has been more modest – with the yuan falling 2.4% over the past month to 6.9 per dollar. But the fixing support has been stronger than it was in April, suggesting that the PBOC’s tolerance for further depreciation is lower. It shows how there is more sensitivity to the level of the exchange rate as the yuan inches toward 7 per dollar.
Bottom-line: 주가지수가 하락했음에도 불구 지난 11번의 약세장 평균 주가수익비율보다 한참 위에 있으며, 만일 여기서 반등으로 정상화 될 경우 역사상 가장 비싼 바닥으로 기록 될 것임. 이 외 월말의 경우 80억 달러 규모 주식을 변동성에 기반해 매수한 알고리즘 펀드가 이제는 100억~150억 달러 규모의 주식 매도자로, 연기금 또한 월말 자산배분 재조정에 따른 100억 달러 규모의 주식 매도자 역할을 할 것임.
Despite a massive valuation correction, stocks are still far from being obvious bargains. At the low in June, the S&P 500 was trading at 18 times earnings, a multiple that exceeded trough valuations seen in all previous 11 bear cycles since the 1950s. Put another way, should stocks bounce from here, this bear market bottom will have been the most expensive on record. The trading desk warned about further selling pressure from computer-driven traders as well as funds that need to rebalance their asset allocation at the end of the month. Systematic macro strategies, who were buyers of an estimated $8 billion of equities last week, will now flip to sellers this week, potentially unloading $10 to $15 billion of stocks as volatility picks up, the team’s model shows. Meanwhile, pension and asset allocators are likely to sell $10 billion of shares.
Despite a massive valuation correction, stocks are still far from being obvious bargains. At the low in June, the S&P 500 was trading at 18 times earnings, a multiple that exceeded trough valuations seen in all previous 11 bear cycles since the 1950s. Put another way, should stocks bounce from here, this bear market bottom will have been the most expensive on record. The trading desk warned about further selling pressure from computer-driven traders as well as funds that need to rebalance their asset allocation at the end of the month. Systematic macro strategies, who were buyers of an estimated $8 billion of equities last week, will now flip to sellers this week, potentially unloading $10 to $15 billion of stocks as volatility picks up, the team’s model shows. Meanwhile, pension and asset allocators are likely to sell $10 billion of shares.
Bottom-line: 아시아 통화 지수가 1997년 이후 가장 큰 폭인 -7.2% 하락하며 2004년 수준으로 내려 옴. 달러 대비 통화 절하는 중앙은행에게 긴축을 더 해야한다는 압력으로 작용할 것임.
Yuan Drop Is Bad News for Asian Central Banks’ Inflation Fight. A falling yuan is dragging down other Asian currencies with it, which may necessitate more tightening by central banks in the region. The Bloomberg JPMorgan Asian Dollar Index is falling toward its lowest level since 2004. It’s slumped 7.2% so far in 2022, which would be the biggest annual slide since the Asian financial crisis in 1997. A deepening drop in the onshore yuan, which makes up 41.8% of the index, has been amplifying depreciation pressures on the regional currencies, along with Fed policy tightening and dollar strength that ensues.
Yuan Drop Is Bad News for Asian Central Banks’ Inflation Fight. A falling yuan is dragging down other Asian currencies with it, which may necessitate more tightening by central banks in the region. The Bloomberg JPMorgan Asian Dollar Index is falling toward its lowest level since 2004. It’s slumped 7.2% so far in 2022, which would be the biggest annual slide since the Asian financial crisis in 1997. A deepening drop in the onshore yuan, which makes up 41.8% of the index, has been amplifying depreciation pressures on the regional currencies, along with Fed policy tightening and dollar strength that ensues.
Bottom-line: 투자 심리가 안정되며 아시아 증시 전반적 상승, 중국은 위안화 절상을 연속으로 고시하며 환율 방어에 대한 강한 의지를 표시함.
An Asian stock gauge rose Tuesday as investor sentiment stabilized following a rout sparked by the Federal Reserve’s signal of a sustained period of restrictive monetary policy to quell inflation. Treasury yields dipped and the dollar was steady. Oil remained in sight of the highest level since late July on potential Libyan production outages. Gold inched lower while Bitcoin made modest gains. In China, the central bank set a stronger-than-expected yuan fixing for a fifth day, a sign it doesn’t want an excessively weak currency. The move highlights how greenback strength is a challenge for Asia as the region’s currencies slip. There’s “more pain ahead” for the yuan and a fall to 7 per US dollar looks likely, Divya Devesh, a foreign exchange strategist at Standard Chartered Plc, said on Bloomberg Television.
An Asian stock gauge rose Tuesday as investor sentiment stabilized following a rout sparked by the Federal Reserve’s signal of a sustained period of restrictive monetary policy to quell inflation. Treasury yields dipped and the dollar was steady. Oil remained in sight of the highest level since late July on potential Libyan production outages. Gold inched lower while Bitcoin made modest gains. In China, the central bank set a stronger-than-expected yuan fixing for a fifth day, a sign it doesn’t want an excessively weak currency. The move highlights how greenback strength is a challenge for Asia as the region’s currencies slip. There’s “more pain ahead” for the yuan and a fall to 7 per US dollar looks likely, Divya Devesh, a foreign exchange strategist at Standard Chartered Plc, said on Bloomberg Television.
Bottom-line: 잭슨홀의 매는 중앙은행이 금리인상을 곧 멈출 것이란 기대를 완전히 잡아먹지 못한 것 같음. 완화적 정책 기대감은 사라졌지만, 파월의 연설 전에 대부분 일어난 일이며 이후의 추가적 움직임은 강하지 않기 때문임.
Jackson Hole Hawkishness Fails to Completely Quash Pivot Bets. The fallout of Jerome Powell’s hawkish Jackson Hole speech continues to ripple through financial markets with the surprising exception of Eurodollar bets on rate cuts next year. While expectations for monetary easing have clearly been pared, all of the damage was done before the Fed Chair spoke. On Monday last week, a gauge of implied rate moves had wiped out all bets of a cut in the first half of 2023, but they have edged back by a couple of basis points since, and were unaffected by the speech itself. The same pattern can be seen in predictions for the second half where market pricing for around 35 basis points of cuts has been pretty steady for a week and a half now. That’s even as Treasury yields climbed in the aftermath of Powell’s unequivocally hawkish remarks.
Jackson Hole Hawkishness Fails to Completely Quash Pivot Bets. The fallout of Jerome Powell’s hawkish Jackson Hole speech continues to ripple through financial markets with the surprising exception of Eurodollar bets on rate cuts next year. While expectations for monetary easing have clearly been pared, all of the damage was done before the Fed Chair spoke. On Monday last week, a gauge of implied rate moves had wiped out all bets of a cut in the first half of 2023, but they have edged back by a couple of basis points since, and were unaffected by the speech itself. The same pattern can be seen in predictions for the second half where market pricing for around 35 basis points of cuts has been pretty steady for a week and a half now. That’s even as Treasury yields climbed in the aftermath of Powell’s unequivocally hawkish remarks.