Eurozone

Are Rate Hikes Bad For Gold?

Gold does not necessarily rise and fall with interest rates, jewelry demand in India, or any other widely believed nonsense. Rather, gold has moved in conjunction with perceptions as to whether or not the Fed and central banks have everything under control.

The 5 Key Things To Watch For In Today's Fed Minutes

Despite desperate attempts to jawbone March rate-hike-odds higher, because as Master said last night "we don't want to surprise the markets", Fed Funds Futures imply just a 36% chance (down from a week ago). That suggests, if The Fed is serious about March, that today's minutes must be spun towards that narrative. Here are the five key areas to watch for...

Blow Out In German 2Y Bonds Sends Yield Crashing To Record Low As Political Fears Grow

The ongoing scramble for German safety away from French political uncertainty, has led to yet another blow out day for German 2 Year Schatz, with the yield tumbling to a fresh all time low of -0.92%, as Eurozone breakup concerns have spread from the bond market, and are now pressuring the euro sending the EURUSD below 1.05 for the first time in over a month.

Eurozone PMI Jumps To 56, Highest Since April 2011; Job Creation Best In A Decade As Inflation Surges

Eurozone private sector and manufacturing growth unexpectedly jumped to the highest since 2011 in February and job creation reached its fastest since August 2007, propelled by strong demand and optimism about the future, the latest Markit PMI survey found. The Markit Eurozone PMI registered 56.0 in February, up from 54.4 in January , the highest reading since April 2011.

Frontrunning: February 21

  • Global Stocks and Bond Yields Rise (WSJ)
  • Despite Dissents on White House Policy, Mattis Holds Sway (WSJ)
  • Trump’s Travel Ban Won’t Hit the U.S. Economy, At Least This Year (BBG)
  • Pundit Brings ‘Global Jihadist Movement’ Theory to White House (WSJ)
  • HSBC Plunges After Missing Profit Estimates on Revenue Drop (BBG)
  • Euro-Area Economic Recovery Broadens as France Outpaces Germany (BBG)

US Futures, European Stocks Rise Despite HSBC Plunge; Dollar, Oil Jump

European stocks rose again with S&P futures higher, while Asian stocks were mixed. The dollar rose jumped on hawkish comments by Philly Fed's Harker, oil rose following optimistic OPEC comments, while gold dropped. Markets have largely ignored results by financial heavyweight HSBC, which posted its largest fall since mid-2015 after reporting a 62% plunge in pretax profit.

How Many Euro Crises Will This Make? It's Getting Hard To Keep Track

Every few years, it seems, one or another mismanaged eurozone country falls into one or another kind of crisis. This leads to speculation about the end of the common currency, which in turn spooks the global financial markets. Then the ECB conjures another trillion euros out of thin air and calm returns for a while. At least, that’s how it’s gone in the past. The latest crisis has more than the usual number of flash-points and could, therefore, be something new and different.

People Are Suddenly Worried About China (Again)

While Trump seemingly remains the only topic worthy of discussion blanketing the airwaves, as the following chart from Goldman demonstrates, it has been China where policy uncertainty has stealthily exploded in the past three months.

The Week's Key Economic And Financial Events

In this holiday-shortened week, attention will be on the US FOMC minutes, housing data and consumer confidence. There will be GDP, PMI and inflation releases across the Euro Area as well as the latest Greek Eurogroup meeting. Look for GDP and public finances data in the UK.

Frontrunning: February 17

  • ‘In Trump We Trust’ Is Market Mantra as Turmoil Besets White House (BBG)
  • World stocks lose momentum after record-breaking week (Reuters)
  • As Tax Debate Heats Up, Lawmakers Struggle to Think of a Plan B (WSJ)
  • Mnuchin Warned as G-20 Sees New Economic Order (BBG)
  • Deutsche Bank examined Donald Trump's account for Russia links (Guardian)
  • Stop hurling insults and listen, Pope Francis tells politicians (Reuters)