Marc To Market's blog

Mistrust claims of knowledge of contemporaneous activity by Japanese investors. The most recent country specific data is from February. In this context net flows are more important than gross flows. In addition, many observers have ignored/forgotten the high currency hedge ratios on purchases of foreign bonds.

A high level overview of the drivers of the capital markets.

A discussion of gold and US Treasury report on foreign exchange.  

It is the yen, not the dollar, that is the key currency in the foreign exchange market.  

Among the surprises of the week: the dollar has not gone above JPY100, JGB yields have risen this week, Portuguese bond yields have fallen.

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A discussion of what investors who are being displaced by BOJ purchases are going to do. It may not be as simple as rushing to buy foreign assets that people are anticipating.

The fastest growing part of the median household income for nearly a quarter of a century has been transfer payments.  The state has stepped in to fill the gap left by the breakdown of the previous social conract.  The new efforts to renegotiate the basket of goods citizens receive is likely to antagonize employee and employer relationships.  

When European governments buys goods and services they often do not pay their suppliers in full. Many countries in the euro area are in arrears. These are not included in the Maastricht definition of debt. Italy is the most egregious and this in turn has aggravated the credit crunch for the SMEs and increase the non-performing loans at banks.

A big picture look at the drivers of the global capital markets.

Portugal's court ruling and Italy's caretaker government decisions briefly discussed.

The downside technical correction in the dollar that we have been anticipating appears to have begun against most of the major currencies.  The drift lower against the yen over the past month has ended, and although we are skpetical of the impact of the stimulative monetary and fiscal policies in Japan, technically it is difficult to resist the momentum for additional yen weakness.  

Thoughts on the BOJ, ECB and US jobs.

Economists have adjusted their forecasts and it will be difficult for the US data to continue to surprise on the upside. Moreover, there are signs that the economy lost some momentum into the end of Q1 that will likely spill over in Q2. We look at the relatively subdued reaction to the losses that will be incurred by uninsured depositors in Cyprus and recognize that it is far from unprecedented. In the US, the last time uninsured depositors took a hit (50%) was in the IndyMac failure. We show a deterioration of the financial situation in Italy, on top of the political and economic challenges. Lastly, we bring to your attention the deteriorating technical tone for the dollar against the yen and Japanese shares.

Overview of the major central bank meetings and data preview as well as the latest from Cyprus and Italy.

An oveview of the technical condition of the major currencies.  Offered as a compliment to macro analysis.