Steven Englander

Helping Draghi Talk The Euro Down

"Where it gets difficult is that most investors expect some sort of effort at talking down the euro. It is not enough to say 'we still need a lot of stimulus' or  'we target inflation and the euro affects our inflation forecast'. Such formulations are much too generic.  However the ECB does have an advantage..."

"Payrolls Should Be Boring: Two Numbers Can Make It Exciting"

"Below 130k and with some soft survey indicators softening, I think investors get nervous.... if we get a 250k and an 0.4% (or higher) the effect could be longer lasting. If it looks like boom time in labor markets, it makes sense that there be spillover into wages"

Watch Live: Yellen Testimony Day 2, And Three Questions She Should Answer

It's time for day two of Yellen's semi-annual testimony with the Fed Chair today appearing before the Senate Banking Committee. While the prepared remarks are identical, in her speech on Wednesday, Yellen said the U.S. economy should continue to expand over next few years and stressed a gradual approach to tightening as central bank monitors inflation. The attention will be on the Q&A.

Why Wages Are So Weak - A Thought Experiment

"...we are getting paid less for our job-specific knowledge because technology is making it easier to replace us without major loss of productivity with less skilled workers... The implications for markets are significant..."

ECB Preview: The Market's All-In But "There's A Significant Chance Draghi Disappoints"

Blackrock's chief multi-asset strategist summed up tomorrow's anxiously awaited ECB meeting best by noting that "what’s priced into markets is a fully fledged extension of the [bond-buying] program," but warns that, thanks to a muted reaction to the Italy vote and recent encouraging data, "there’s a significant chance the ECB disappoints markets." As bond traders bet on a six-month QE extension, Citi warns, anything less will be seen as hawkish and send EUR surging.

Bond Bloodbath Becomes Buying-Panic As Treasury Yields Tumble Most Since June

After 3 days of carnage in US Treasuries, pushing longer-dated bond yields notably above US equity dividend yield - and following both Citi and Goldman reports that Trumponomics may be less inflationary than expected (and the yield surge is tightening financial conditions) drastically, longer-dated bond yields are dropping notably in the early Asia session. 10Y yields are down 8bps - the most since June as 30Y drops back below 3.00%.

What Went Wrong Yesterday

The answer to ‘How do you stimulate the economy when there are no more conventional rate or unconventional QE/forward guidance tools?’ is ‘Broaden the set of assets that you can buy”. And while Congress may be unwilling when the unemployment rate is under 5%, they may be more willing at 7% if a recession is underway….and this means they can continue to do slow and unsteady hikes, based on the current framework.

85% Of Wall Street Expects a "Dovish Hike Signal" From Yellen Tomorrow

Earlier this week, Citi's head of G10 FX strat Steven Englander conducted a survey among 350 participants asking them what they expect from Janet Yellen's Jackson Hole speech. According to the vast majority, or 85% of the respondents, Yellen will lean toward one 2016 rate hike with hiking risk “overwhelmingly” in December even as September hiking risk is seen as “modestly underpriced."

Fed Admits Another $4 Trillion In QE Will Be Needed To Offset An "Economic Shock"

"Large-scale asset purchases and forward guidance about the future path of the federal funds rate have almost no ability to offset a shock in current circumstances, but down the road may be able to provide enough additional accommodation to fully compensate for a more limited [ability] to cut short-term interest rates in some, but not all and maybe even not most, circumstances."

How Citi Is Trading The Fed's "Mildly Hawkish" Statement

"Best to trade long USD against the USD-bloc, our favorite being long USDCAD. Also EURUSD and GBPUSD to weaken - USDJPY might be a bit mixed until Friday. The market is likely to continue bias long-USD into NFP (which is still a week away), but given the trend in jobless claims, its hard not to have "some" positive expectations for next Friday."

Citi On Yellen's Speech: "What She Did Not Say Is Dovish"

"Yellen expresses optimism throughout the speech but she doesn’t repeat her guidance from less than two weeks ago that a rate hike would be forthcoming  “in coming months." Citi adds that this on net is slightly dovish. "There is no timetable and the pluses are very vague. Unless the sky is falling in there is no way that she can express pessimism -- would be self-defeating, so you take it as a given that she will sound optimistic on hitting targets in long-term. The vagueness on the timing of hikes is what is striking."