Swiss National Bank
Russell Napier: "The Most Dangerous Thing In Finance Is The Thing That Never Ever Moves - Until It Moves"Submitted by Tyler Durden on 02/06/2015 16:39 -0400
Taking interest rates so negative that they threaten a run on bank deposits should not be seen as success --- it is failure. Creating bank reserves at that pace should not be seen as success --- it is failure. The next failure may well be some government-inspired restriction on capital inflows. Well, you could call such restrictions, and risking the liquidity of banks, monetary success if you like, but then you probably also think it’s a success to throw the ball one yard from the touchline.
This was the “Rubicon” moment: the instant at which Central Banks gave up pretending that their actions or policies were aimed at anything resembling public good or stability.
It Will Now Cost You 0.75% To Save Money In Denmark: Danish Central Bank Cuts Rates For FOURTH Time In Three WeeksSubmitted by Tyler Durden on 02/05/2015 11:07 -0400
It has become a weekly thing now. In its desperation to preserve the EURDKK peg, the Danish central banks has cut rates into negative, then cut them again, then again last week, and moments ago, just cut its deposit rate to negative one more time, pushing NIRP from -0.5% to -0.75%, its fourth "surprise" rate cut in the past 3 weeks!
SNB Said To Be Buying EUR Crosses In Aftermath Of ECB's Greek Fiasco; Europe Boosts Its Own Growth ForecastSubmitted by Tyler Durden on 02/05/2015 07:33 -0400
Switzerland`s 10-Year Bond Yield is now negative 15 basis points. Yes even neutral Switzerland`s bond market has been broken...
"It's a man-made tragedy, and the men who made it won’t fix it." So it turns out Lenin wasn’t just right that the best way to destroy the capitalist system is to debauch the currency. It’s also the best way, as Venezuela can tell you, to destroy the socialist one.
In January, gold surged 8 per cent in dollar terms, 11 per cent in pound terms and a very large 16 per cent in euro terms. January’s 8.4% gain for gold in dollar terms was the best month in terms of price gains in three years.
- Germany Sees No Need to Scrap Troika in Overseeing Greek Turnaround (WSJ)
- European markets subdued as Chinese data weighs (Reuters)
- U.S. Oil Workers Strike Enters Second Day as Crude Prices Slide (BBG)
- Oil prices rally above $55 as investors pile in (Reuters)
- Obama Wants a New Tax on U.S. Companies' Overseas Profits (BBG)
- If Trading Bonds Is Hard, Think About Pain When Rates Rise (BBG)
- Julius Baer Braces for Swiss Franc Impact (WSJ)
- Coke, Budweiser win as Super Bowl ad battle gets serious (Reuters)
The overnight session had been mostly quiet until minutes ago, when unexpectedly WTI, which had traded down as low as the mid $46 range following the weakest Chinese manufacturing data in two years, saw another bout of algo-driven buying momentum which pushed it sharply, if briefly, above $50, and was last trading about 2.6% higher on the day. In today's highly correlated market, this was likely catalyzed by a brief period of dollar weakness as well as the jump of EURCHF above 1.05, within the rumored corridor implemented by the Swiss National Bank, which apparently has not learned its lesson and is a glutton for a second punishment, after its hard Swissy cap was so dramatically breached, it hopes to repeat the experience with a softer one around 1.05. Expect to see even more FX brokers blowing up once the EURCHF 1.05 floor fails to hold next.
Many will debate if it was worth making Super Bowl XLIX into Super Brawl I, but those who trade the market will be familiar with the kind of volatility that everyone just experienced in the final minutes of what otherwise may have been the most nail-biting super bowl in history.
Hillary Clinton isn’t a lock for the 2016 Elections: Google searches for US Senator Elizabeth Warren surpassed the former US Secretary of State just last month with a ratio of 6 to 5. Interest in bowling (+85% since October) is growing faster than Facebook (-4%) and Youtube (-2%), and there is a lot more interest in smoking marijuana than tobacco (58 vs. 19 on average). Those are just three of the surprising findings from ConvergEx's latest survey of social engagement using Google Trends.
What Denmark has just done is "back-door QE", because as some forget, there are two ways to push the price of an asset higher (thus pushing its yield lower in the case of a bond): increase demand, which is what conventional QE does when central banks buy bonds, or reduce supply. Which is what Denmark just did by completely cutting off all Treasury issuance "until further notice". As a result, paradoxically, increasingly more speculators are betting that the "Trade of 2015" could be doing precisely the opposite of what the Danish central bank is hoping will happen: i.e., shorting the EURDKK (or going long the DKKEUR) in hopes that when the Danish peg finally does break, it too will result in long Swiss France-type profits.
Swiss National Bank Scraps Hard Franc Ceiling, Replaces With Soft Ceiling Instead Local Press ReportsSubmitted by Tyler Durden on 02/01/2015 11:59 -0400
Three weeks ago, what the SNB really did was be the first developed central bank to admit defeat in the global currency wars, realizing that contrary to "popular" Magic Money Tree opinion, it does not have an infinite balance sheet. And now the time has come to pay the price for delaying reality by over three years. To many this was a welcome move as it means after several years of horrendous monetary policies, Switzerland has finally regained some monetary sense, and while the near-term economic (and stock market) pain may be acute, the long-term will be thankful. And then, earlier today, we read that the SNB didn't learn its lesson after all, and instead of a hard EURCHF 1.20 floor, it is now unofficially targeting an exchange rate of 1.05-1.10 per Euro, aka a "soft", kinda/sorta Swiss Franc cap, according to Schweiz am Sonntag.
Simple near-term outlook.
We won't go into the specific details of China's burst housing bubble, the shady underworld of its pyramid scheme wealth-management products, the fact that any hard asset in China is rehypothecated literally a countless number of times, the nuances of its deflating shadow banking system, or even the complexities of its alleged capital controls (alleged, because as a reminder, they only exist for the common folks - the really wealthy Chinese are naturally exempt from any capital flow constraints). We will point out something even more disturbing. The Offshore Yuan just hit a two-year low, reaching a level not seen since September 2012.