There are a number of factors that contribute to the development of commodity prices. Traditional supply-and-demand is a key factory that taps global demand and production. Speculative appetite is another contributing factor that reflects well in volatility and measures like the COT. However, the most prominent driver moving forward may be its pricing instrument:...
The Dow hasn't been played the role of first mover very often recently. More often, the Blue Chip index lags the more popular S&P 500. That isn't the case now however, as the index carves out a very clear head-and-shoulders pattern. Will the Dow lead a charge lower? Is 'risk' ready to fold?
The Fed is 'data dependent'. That means when they move on monetary policy depends on the quality of data that supports the move. Few indicators carry the kind of influence over the the Fed's policy mandates like the monthly labor report. Is the economy healthy enough and wage growth presenting enough inflation pressure to motivate the rate hikes the Dollar and...
Comparing different asset classes' volatility indexes, FX is holding onto its buoyant levels more readily than many other popular asset types. Why? Interest rate differentials - as low as they are - leverage more impact in exchange rates where valuation is relative.
How long will the promise of BoJ QE keep the yen crosses rising? We have already seen the stimulus ramp lose some traction with some pairs. If risk trends gives, the stimulus drive will likely cave to the stronger turn.
Benchmarking to last Summer's lull in activity, we find only one major 'risk' oriented asset class still in positive territory: equities. The S&P 500 is my preferred stand in for the role; but you can see it stands alone. Carry trade, high-yield bonds, emerging markets, frontier markets and commodities are all tumbling between 6 and 32 percent declines. Can the...
The S&P 500 is many peoples' benchmark for 'risk trends'. However, the broader financial market is not as optimistic as the index seems to reflect. Looking at one of the more risky areas of the world of assets - frontier markets - we have a very distinct and continuous selling pressure.
There are two things that motivate the Dollar: its leading interest rate outlook (which is currently active) and its position as a liquidity-anchored safe haven (not yet in full swing). Here we have USDollar versus two key benchmarks for these themes. The purple line is the CBOE's EURUSD volatility measure. The orange line indicates the inverse Fed Funds futures...
From a technical perspective, this is a familiar move NZDUSD is making. It has broken a very consistent channel and is treating what was a former boundary as a new floor to a change in bearing. This can be a reversal but it could also prove a false signal. How do we further improve our confidence in this setup? Fundamentals.
There is quite a bit of surprise from many that the Dollar has a lot of influence over the direction of oil/other commodities - and vice versa. The greenback is a primary pricing currency for the natural resources, so the link is a practical one. There is deviation as supply/demand issues can override pricing elements, but they don't often diverge for long. Here...
We are nearing the close of the month, and July's Gold candle is not going to be an encouraging one for bulls. Will August bring the break of the midpoint of the metal's three-decade range?
The 20-day (rolling) correlation between Facebook and Nasdaq is 0.91 - exceptionally strong and positive. So will this after hours response to the 2Q earnings drag the market or will the market's general buoyancy level out the stock?
The Fed's statement was simply 'in-line', but that is in-line with a distinctive hawkish view (calling for 2 rate hikes in 2015) from its previous meeting. For most intents and purposes, that is hawkish and thereby Dollar bullish (risk/SPX bearish). Yet, the market remains purposefully aloof. Fed Funds futures are showing liftoff is not 100% expected until the...
Heading into the FOMC, the market doesn't want to take the next step and turn a recent selloff into a committed risk aversion shift. The S&P 500 has called the end to a 5-day drop - the first since January 15. With this capitulation, we still haven't seen a six-day drop in two years.
While there is a backdrop of genuine growth, returns and new capital flowing into the financial system. There is no doubt a considerable contribution to the US equity market's (as well as many other risk-centric assets around the world) from monetary policy accommodation championed by the Fed and its previously-unrivaled QE programs. What happens when they start...
An advance in the Greenback and medium-term Treasury yields can stand as good evidence of a rise in interest rate expectations. However, the shared advance can also be a side effect of the end to the front-run-the-Fed effort when QE programs were running full steam. Then again, that alternative influence doesn't necessarily benefit the Dollar.
The US-based S&P 500 is close to turning negative for the year. Other high-flying, stimulus-intensive regions are still green for 2015, but they are quickly giving back gains despite their policy authorities' efforts. If risk aversion continue to unfold despite stimulus, is that a fire that can be put out by central banks and governments?
Previously during the sharp Shanghai Composite / CSI300 tumble, the Chinese Volatility Index was slow to respond and ultimately hesitant to reflect the risk seen in underlying price tumble. Doesn't seem to be inhibited this time. Easily outpacing the US-based VIX Index.