US stocks extended their October surge, as traders weighed renewed speculation that central banks may moderate their hawkishness. The S&P 500 jumped 3.1%, posting its best two-day performance since April 2020 amid a short squeeze and poor US data.
Bottom-line: 1,992명의 미국 성인을 대상으로 9월 23일에서 25일 간 실시 된 설문에 따르면, 최근 미국인을 반으로 가르는 화두는 인플레이션임. 절반은 경기침체를 감수하고도 인플레이션을 통제하길 원하고, 다른 절반은 경기침체를 피하기 위해 인플레이션을 내버려두길 바람. 인플레이션에 대한 중앙은행의 정책으로 인해 설문 응답자의 2/3 이상이 해고나 고용 축소를 우려하고 있고, 3/4 이상이 높아진 금리로 인한 월간 자금 압박을 느끼고 있음. 부채를 진 사람들의 70%는 신용카드 할부, 자동차 할부, 주택 대출 및 학자금 상환에 대한 이자를 두려워 하고 있음.
The latest in the long list of things Americans are divided on? Interest rate hikes. Half of the country wants to tame inflation quickly, even if it means a recession, according to an exclusive study from the Harris Poll. The other half would prefer avoiding a recession, regardless of inflation ticking higher. To curb the largest price increases in four decades, the US Federal Reserve has been raising interest rates this year. Policymakers recently hiked rates by 75 basis points for a third straight time and signaled they will continue to tighten monetary conditions. With markets volatile and some employers announcing job cuts, more than two-thirds of Americans are worried that companies will start eliminating staff or hiring less, according to the poll. The interest rates consumers will have to pay on debt is also a concern. About three quarters of Americans who are paying interest express worries about their monthly budgets, due to the jump in rates. Among those that have debt, about 70% are dreading the rising interest on credit card debt, car loans, mortgages and student loans, with millennials the most concerned. In addition, 80% of Gen Z respondents and 76% of millennials are distressed about the interest rates on loans they might try to qualify for. The survey featured a nationally representative sample of 1,992 US adults and was conducted online Sept. 23 to 25.
The latest in the long list of things Americans are divided on? Interest rate hikes. Half of the country wants to tame inflation quickly, even if it means a recession, according to an exclusive study from the Harris Poll. The other half would prefer avoiding a recession, regardless of inflation ticking higher. To curb the largest price increases in four decades, the US Federal Reserve has been raising interest rates this year. Policymakers recently hiked rates by 75 basis points for a third straight time and signaled they will continue to tighten monetary conditions. With markets volatile and some employers announcing job cuts, more than two-thirds of Americans are worried that companies will start eliminating staff or hiring less, according to the poll. The interest rates consumers will have to pay on debt is also a concern. About three quarters of Americans who are paying interest express worries about their monthly budgets, due to the jump in rates. Among those that have debt, about 70% are dreading the rising interest on credit card debt, car loans, mortgages and student loans, with millennials the most concerned. In addition, 80% of Gen Z respondents and 76% of millennials are distressed about the interest rates on loans they might try to qualify for. The survey featured a nationally representative sample of 1,992 US adults and was conducted online Sept. 23 to 25.
Market Implication: 호주 중앙은행이 50bp 금리인상 대신 25bp 금리인상을 택하면서 미국 중앙은행과 여타 중앙은행 또한 강경한 통화 긴축에 제동이 걸리지 않겠냐는 긍정론이 대두되고 있음. 금일 뉴질랜드 중앙은행의 금리결정에 대한 예상치를 제시한 22명 중 20명이 50bp 금리인상을 예상하고 있기 때문에 이런 기대감을 종식시킬 수도 있음. 만일 50bp 금리인상이 진행 될 경우 다른 중앙은행들의 공격적 긴축 경로가 여전함을 상기시키게 될 것임.
The Reserve Bank of New Zealand looks set to serve stocks a dose of reality -- as it raises rates by 50 bps. Equities surged in the US after the Reserve Bank of Australia increased its benchmark rate by 25 bps, slowing from the 50-bp steps it had been making. The move spurred some optimism that the Fed and other central banks would also scale back the pace of tightening. Now the RBNZ may undo the bullish mood. The Reserve Bank will lift its cash rates to 3.5% from 3%, according to 20 of 22 economists surveyed by Bloomberg. Most of them predict another half-point increase at the final meeting of the year in November, and some forecast increases to 4.5% or more in 2023. The decision will serve as a reminder that central banks including the Fed remain on an aggressive tightening path.
The Reserve Bank of New Zealand looks set to serve stocks a dose of reality -- as it raises rates by 50 bps. Equities surged in the US after the Reserve Bank of Australia increased its benchmark rate by 25 bps, slowing from the 50-bp steps it had been making. The move spurred some optimism that the Fed and other central banks would also scale back the pace of tightening. Now the RBNZ may undo the bullish mood. The Reserve Bank will lift its cash rates to 3.5% from 3%, according to 20 of 22 economists surveyed by Bloomberg. Most of them predict another half-point increase at the final meeting of the year in November, and some forecast increases to 4.5% or more in 2023. The decision will serve as a reminder that central banks including the Fed remain on an aggressive tightening path.
Bottom-line: 국채는 올해 -12.4%의 손실을 주고 있고, 일본 엔화는 24년래 최저 가치에 거래되고 있음. 그럼에 도 불구 피델리티는 국채 및 엔화가 본질가치보다 저평가되어 거래된다 판단해 매수하고 있음. 국채 매수자는 피델리티 외에 제이피모건이나 쥬피터도 있는데, 인플레이션을 통제하기 위한 중앙은행의 정책에 따라 경착륙, 경기침체로의 경로가 명확해 보이기 때문. 이런 시기에 볼록성을 가진 자산이 필요한데 국채와 엔화가 여전히 그런 역할을 한다고 봄.
The world is careening toward recession and buying old haven reliables Treasuries and the yen still offers the best protection, according to Fidelity International. “Our view is a hard landing is going to happen,” said George Efstathopoulos, money manager at the investment giant in Singapore. “We are looking for convexity trades that should do well in a hard landing -- both long-dated Treasuries and yen should,” he said. Treasuries currently make up about 2% of the firm’s global multi-asset income fund, up from zero just a few months ago, Efstathopoulos said. He’s also buying the yen -- a currency wallowing near a 24-year low thanks to the widening yield gap between policy rates in the US and Japan -- as both assets currently look “cheap.”. Fidelity International joins JPMorgan Asset Management and Jupiter Asset Management in buying Treasuries on bets a recession is a virtual certainty. The bullishness comes despite the securities handing investors a record 12.4% loss this year as the Federal Reserve aggressively hikes interest rates to combat the fastest inflation in a generation.
The world is careening toward recession and buying old haven reliables Treasuries and the yen still offers the best protection, according to Fidelity International. “Our view is a hard landing is going to happen,” said George Efstathopoulos, money manager at the investment giant in Singapore. “We are looking for convexity trades that should do well in a hard landing -- both long-dated Treasuries and yen should,” he said. Treasuries currently make up about 2% of the firm’s global multi-asset income fund, up from zero just a few months ago, Efstathopoulos said. He’s also buying the yen -- a currency wallowing near a 24-year low thanks to the widening yield gap between policy rates in the US and Japan -- as both assets currently look “cheap.”. Fidelity International joins JPMorgan Asset Management and Jupiter Asset Management in buying Treasuries on bets a recession is a virtual certainty. The bullishness comes despite the securities handing investors a record 12.4% loss this year as the Federal Reserve aggressively hikes interest rates to combat the fastest inflation in a generation.
Market Implication: 트위터 인수가 불확실성 속에 있을 때 합병차익거래에 뛰어 든 투자자들에게 어제는 충격적일 정도로 좋은 날이었음. 인수 건이 다시 진행되기로 하면서 트위터 주가는 4월 합병계약 체결 이후 합의 된 가격에 가장 가깝게 붙었기 때문임. 이는 합병에 관한 계약법이 강력한 구속력을 가짐을 보여 준 사례임.
Elon Musk’s decision to revive his $44 billion buyout of Twitter Inc. is shockingly good news for investors including billionaire Carl Icahn who continued to bet on the outcome of the deal through months of uncertainty. After Musk and Twitter agreed to proceed with the deal at the original offer price at $54.20 a share on Tuesday, the social media company’s stock rallied as much as 23%, pushing the spread to its narrowest level since the pair entered a merger pact back in April. Tuesday was a “great day for arbs,” said Julian Klymochko, chief executive officer of Accelerate Financial Technologies. The saga closing in Twitter’s favor demonstrates the strength of definitive merger agreements and contract law, said Klymochko, who runs a merger-arbitrage investment fund.
Elon Musk’s decision to revive his $44 billion buyout of Twitter Inc. is shockingly good news for investors including billionaire Carl Icahn who continued to bet on the outcome of the deal through months of uncertainty. After Musk and Twitter agreed to proceed with the deal at the original offer price at $54.20 a share on Tuesday, the social media company’s stock rallied as much as 23%, pushing the spread to its narrowest level since the pair entered a merger pact back in April. Tuesday was a “great day for arbs,” said Julian Klymochko, chief executive officer of Accelerate Financial Technologies. The saga closing in Twitter’s favor demonstrates the strength of definitive merger agreements and contract law, said Klymochko, who runs a merger-arbitrage investment fund.
Bottom-line: 모건스탠리가 한국 및 대만, 업종에서는 반도체와 하드웨어를 비중확대로 투자의견 상향을 함. 1995년 이후 가장 긴 약세장, 평균보다 높은 고점 대비 하락폭, 최저에 다가선 밸류에이션이 항복의 징후로 봤고, 다음 초기 사이클을 위한 묘목을 심을 때라 주장함.
There is high chance that a bottom can form in emerging and Asian equities from current levels as “signs of capitulation are abundant,” Morgan Stanley said, upgrading the regions to overweight from equal-weight. “It’s time to plant saplings for next cycle,” strategists including Jonathan Garner wrote in a note on Tuesday, citing EMs suffering the longest bear market since 1995, a higher-than-average fall from peak to trough and valuations that are near bottom. Investors should now “rotate towards proven early-cycle beneficiaries” they wrote, upgrading Korea and Taiwan, and semiconductor and tech hardware to overweight.
There is high chance that a bottom can form in emerging and Asian equities from current levels as “signs of capitulation are abundant,” Morgan Stanley said, upgrading the regions to overweight from equal-weight. “It’s time to plant saplings for next cycle,” strategists including Jonathan Garner wrote in a note on Tuesday, citing EMs suffering the longest bear market since 1995, a higher-than-average fall from peak to trough and valuations that are near bottom. Investors should now “rotate towards proven early-cycle beneficiaries” they wrote, upgrading Korea and Taiwan, and semiconductor and tech hardware to overweight.
Market Implication: 이틀 간 6% 상승으로 고점 대비 낙폭이 -25%에 불과한 주식시장이 경기침체를 이제 반영하기 시작했을 뿐이란 씨티의 의견으로 골드만삭스나 메릴린치와 궤를 같이 하는 의견임. 주목할 점은 그보다 상관관계에 대한 내용이며, 시장을 이해하는데 도움이 됨. 서로 다른 주식 간 가격의 움직임이 매우 동조화 된 시장에선 개별 주식의 실적 호재가 그리 큰 도움이 되지 않음. 되려 금리와 신용과 같은 거시경제 변수에 쓸려 다닐 것으로 예측했음. 올해 매크로 펀드나 퀀트 펀드가 우수한 수익을 거둔 이유는 이처럼 개별 기업을 선별하는 안목이 있어도 주식 간 차별성이 떨어지고 거시경제 변수에 따라 군집을 이뤄 동시에 움직이기 때문임. 매크로를 중요하게 볼 때와 그렇지 않을 때를 이처럼 주식 간 상관관계의 높고 낮음으로 가늠할 수 있음.
US stocks may resume their slump as they have only just begun to price in a recession, according to Citigroup Inc.’s quant strategists. The market has turned “decidedly defensive again,” the strategists including Hong Li wrote in a note Tuesday. Recent synchronized moves suggest “equity investors are paying closer attention to the increased credit risk,” they wrote. To make matters worse, the upcoming earnings season may do little to help sentiment given that stock correlations have reached the highest since the onset of the pandemic, according to the note. That suggests individual results may get drowned out by extreme moves in interest rates and credit markets. The bearish view echoes similar calls from other investment banks, including Goldman Sachs Group Inc. and Bank of America Corp., concerned that the S&P 500 has yet to bottom out as a hawkish Federal Reserve pressures earnings and equity valuations. The S&P 500 has risen almost 6% over the past two days after dropping to its lowest since November 2020 on Friday. While the benchmark has retreated as much as 25% from its record high in January, the slump was less than half of the 56% peak-to-trough plunge during the global financial crisis.
US stocks may resume their slump as they have only just begun to price in a recession, according to Citigroup Inc.’s quant strategists. The market has turned “decidedly defensive again,” the strategists including Hong Li wrote in a note Tuesday. Recent synchronized moves suggest “equity investors are paying closer attention to the increased credit risk,” they wrote. To make matters worse, the upcoming earnings season may do little to help sentiment given that stock correlations have reached the highest since the onset of the pandemic, according to the note. That suggests individual results may get drowned out by extreme moves in interest rates and credit markets. The bearish view echoes similar calls from other investment banks, including Goldman Sachs Group Inc. and Bank of America Corp., concerned that the S&P 500 has yet to bottom out as a hawkish Federal Reserve pressures earnings and equity valuations. The S&P 500 has risen almost 6% over the past two days after dropping to its lowest since November 2020 on Friday. While the benchmark has retreated as much as 25% from its record high in January, the slump was less than half of the 56% peak-to-trough plunge during the global financial crisis.
'i' Think: 지난 금요일에 발표 된 R**의 개념은 기존의 R*이 수요와 공급의 균형에서 인플레이션이 발생하지 않는 중립금리라면, R**은 금융시스템이 안정적일 수 있는 중립금리임. 낮은 금리로 오랜 기간이 지난 현재에 R**이 R*보다 낮아졌을 뿐 아니라 그 차이도 확대됨. 손쉽게 사용할 수 있는 유동성 때문에 과도하게 형성 된 레버리지로 인해 실물경제가 R*에 해당하는 금리까지 버틸 여력이 없어졌음. 쉽게 말해, 너무 높은 물가와 강력한 고용 시장을 진정시키는 중립금리까지 금리인상을 하려는데 신용 시장 냉각, 국채 유동성 문제, 조달시장 악화와 같이 벌써부터 금융 안정성이 위협받고 있다는 것임. 다른 의미로 중앙은행이 노동시장에 영향을 미칠만큼의 금리를 인상하기 전에 이미 금융 시스템이 불안해진다는 것임. 이는 금융 시스템의 불안정성 때문에 금리인상을 도중에 중단할 경우 결국 인플레이션을 잡을 수 없다는 것임. 중앙은행이 이런 R*과 R** 사이의 간극을 채우려는 동안 아마도 금리는 지금보다 높을 것이고 자산시장은 더 하락할 것으로 보임. 누군가 2004년에서 2006년, 2015년에서 2019년의 중앙은행 금리인상 시기를 떠올린다면, 당시 R*과 R** 사이의 간극이 크지도 않았고, 솔직한 말로 진정한 인플레이션과의 전쟁도 없었음. 결론적으로, 이번 사이클에서 인플레이션과 전쟁이 시작되기도 전에 금융 불안정성이 무대의 중심에 설 수 있을까? 그렇지 않을 것 같음.
This concept of R** presented in a paper at the NY Fed Conference last Friday explains the issue facing the Fed as the market desperately tries to identify the ingredients for a Fed pivot.
The paper lays out:
R* = neutral rate for the REAL ECONOMY where supply=demand and there’s no inflation
R** = neutral rate for FINANCIAL STABILITY
The paper argues that after a time of sustained low rates (ie: currently), the gap between R** and R* widens, with R** falling below R*. With excess leverage built up in the economy (I’m staring at you pension funds), the financial system cannot sustain rates high enough to reach R* in the real economy. There are parallels to today’s backdrop: core PCE is too high, the labor market is too strong. Yet financial stability is already becoming a problem: credit markets freezing up, Treasury liquidity deteriorating, and dollar funding stretched. What does this widening gap mean? The financial system becomes unstable before the Fed is able to raise rates high enough to impact the labor market. In effect, the Fed will fail to rein in inflation before it’s forced to pause to tackle financial instability at home. This is the pickle that the BOE blew wide open last week with their QE operation. The next scenario for markets to grapple with: how to price a Fed that attempts to manage financial stability concerns (akin to the BOE’s liquidity operations) alongside rate hikes? Perhaps there’s a risk of another bout of risk assets plummeting and yields higher before we get to this point. Friday’s jobs figure could be a test. A hot NFP print on could push this narrative to the next level. But look back at the two previous Fed hiking cycles in 2004-2006 and in 2015-2019. Back then maybe the gap between R* and R** was small, so it didn’t matter. And lets be honest, we didn’t have a real inflation fight back then. But with this new, wider gap between the two, could financial instability take center stage before the inflation fight even begins?
This concept of R** presented in a paper at the NY Fed Conference last Friday explains the issue facing the Fed as the market desperately tries to identify the ingredients for a Fed pivot.
The paper lays out:
R* = neutral rate for the REAL ECONOMY where supply=demand and there’s no inflation
R** = neutral rate for FINANCIAL STABILITY
The paper argues that after a time of sustained low rates (ie: currently), the gap between R** and R* widens, with R** falling below R*. With excess leverage built up in the economy (I’m staring at you pension funds), the financial system cannot sustain rates high enough to reach R* in the real economy. There are parallels to today’s backdrop: core PCE is too high, the labor market is too strong. Yet financial stability is already becoming a problem: credit markets freezing up, Treasury liquidity deteriorating, and dollar funding stretched. What does this widening gap mean? The financial system becomes unstable before the Fed is able to raise rates high enough to impact the labor market. In effect, the Fed will fail to rein in inflation before it’s forced to pause to tackle financial instability at home. This is the pickle that the BOE blew wide open last week with their QE operation. The next scenario for markets to grapple with: how to price a Fed that attempts to manage financial stability concerns (akin to the BOE’s liquidity operations) alongside rate hikes? Perhaps there’s a risk of another bout of risk assets plummeting and yields higher before we get to this point. Friday’s jobs figure could be a test. A hot NFP print on could push this narrative to the next level. But look back at the two previous Fed hiking cycles in 2004-2006 and in 2015-2019. Back then maybe the gap between R* and R** was small, so it didn’t matter. And lets be honest, we didn’t have a real inflation fight back then. But with this new, wider gap between the two, could financial instability take center stage before the inflation fight even begins?
US stocks ended in the red but were way off session lows as traders digested solid economic data and more Fedspeak. The S&P 500 dropped 0.2%, trimming a loss of as much as 1.8%.
Bottom-line: 전세계 외환 보유고가 2003년 블룸버그가 집계를 시작한 이래 가장 큰 폭인 -7.8%(1조 달러 상당) 감소함. 엔화와 유로처럼 달러 대비 약세로 인한 평가 상 가치 감소도 일부 있지만, 통화가치 절하를 방어해야 하는 중앙은행들에게 외환 보유고 감소는 압박이 될 수 밖에 없음.
Global foreign-currency reserves are falling at the fastest pace on record as central banks from India to the Czech Republic intervene to support their currencies. Reserves have declined by about $1 trillion, or 7.8%, this year to $12 trillion, the biggest drop since Bloomberg started to compile the data in 2003. Part of the slump is simply due to valuation changes. As the dollar jumped to two-decade highs against other reserve currencies, like the euro and yen, it reduced the dollar value of the holdings of these currencies. But the dwindling reserves also reflect the stress in the currency market that is forcing a growing number of central banks to dip into their war chests to fend off the depreciation.
Global foreign-currency reserves are falling at the fastest pace on record as central banks from India to the Czech Republic intervene to support their currencies. Reserves have declined by about $1 trillion, or 7.8%, this year to $12 trillion, the biggest drop since Bloomberg started to compile the data in 2003. Part of the slump is simply due to valuation changes. As the dollar jumped to two-decade highs against other reserve currencies, like the euro and yen, it reduced the dollar value of the holdings of these currencies. But the dwindling reserves also reflect the stress in the currency market that is forcing a growing number of central banks to dip into their war chests to fend off the depreciation.
Bottom-line: 파월 의장이 1980년대가 우리에게 준 교훈은 성장이 아닌 물가에 집중하라는 것이라 발언했고, 어제도 메리 달리나 라파엘 보스틱이 지속적인 금리인상을 통해 인플레이션을 통제해야 한다고 발언했음. 그럼에도 선물시장은 지정학적, 경제적 위험이 미국 및 다른 지역을 침체에 빠트릴 것이란 우려와 함께 사라졌던 내년 및 내후년 금리인하 기대를 다시 반영하기 시작하는 중임. 어쩌면 중앙은행이 이토록 금리인상의 지속성이라는 주문을 시장에 외치는 이유는 곧 금융시장 환경이 완화될 수 있다는 힌트를 주기 싫은 의도일 수도 있음. 어느 순간 경제상황의 역풍이 오면 그들의 행보를 멈춰야 할 수도 있기 때문임.
Federal Reserve officials keep repeating the mantra they don’t plan to cut interest rates next year. Traders keep doubting them. Eurodollar futures showed reduced expectations Wednesday for Fed interest-rate cuts in 2023 but still price in around a one quarter-point move and at least two more in 2024. Federal Reserve Bank of San Francisco President Mary Daly and Fed Atlanta President Raphael Bostic were the latest to bang the drum on the need to keep tightening in place to reduce inflation that remains near a four-decade high. Traders briefly erased bets on 2023 cuts after the Fed’s strongly hawkish meeting last month, but a series of global economic and geopolitical shocks have reinforced deep concerns that the US and other major economies will tip into recession. As much as Fed Chair Jerome Powell has insisted the lessons of the 1980s show the need to focus on inflation and not growth, investors refuse to believe he will remain steadfast in the face of a severe downturn. “Fed officials’ consistent push back against rate cuts may reflect a desire to avoid hinting at any loosening in financial conditions,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada. “If they remain that determined and move into very restrictive territory, as the dot plots would suggest, a US recession is likely and some reversal of policy will likely be needed at some stage.”.
Federal Reserve officials keep repeating the mantra they don’t plan to cut interest rates next year. Traders keep doubting them. Eurodollar futures showed reduced expectations Wednesday for Fed interest-rate cuts in 2023 but still price in around a one quarter-point move and at least two more in 2024. Federal Reserve Bank of San Francisco President Mary Daly and Fed Atlanta President Raphael Bostic were the latest to bang the drum on the need to keep tightening in place to reduce inflation that remains near a four-decade high. Traders briefly erased bets on 2023 cuts after the Fed’s strongly hawkish meeting last month, but a series of global economic and geopolitical shocks have reinforced deep concerns that the US and other major economies will tip into recession. As much as Fed Chair Jerome Powell has insisted the lessons of the 1980s show the need to focus on inflation and not growth, investors refuse to believe he will remain steadfast in the face of a severe downturn. “Fed officials’ consistent push back against rate cuts may reflect a desire to avoid hinting at any loosening in financial conditions,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada. “If they remain that determined and move into very restrictive territory, as the dot plots would suggest, a US recession is likely and some reversal of policy will likely be needed at some stage.”.