Markets In Turmoil: Global Bond Bloodbath, Currency Rout Accelerates As Stocks Erase Early Gains

Tyler Durden's picture

Monday started off where Friday left off, with the global reflation/stagflation trade in full swing as the dollar surge continues, pushing the DXY above 100 for the first time since December, global bond yields soaring, emerging market currencies tumbling, and the Yuan slammed below 6.85 for the first time. However, where Monday is different is that while European stocks and US index futures started off far higher, E-minis have now faded the entire overnight rally and are now red for the session, on concerns that the spike in yields will cap any more stock upside.

The Bloomberg Dollar Spot Index jumped 0.7 percent, rising for a fourth-straight day, and set for the largest gain over such a period since 2009.

As the dollar surges, emerging markets are getting crushed again and the MSCI Emerging Markets Currency Index slid 0.2 percent, extending last week’s 2.27 percent drop, the deepest five-day loss since June 2013. The lira and Hungarian forint tumbled more than 0.9 percent.

However, while market cheerleaders will point to the imminent new all time highs in the DJIA, it is the rout in bond markets that is the real story as both UK 10Y gilts, Spanish 10Y and Italian 10Y bonds all plunging by the biggest intraday amount in almost a year. As Bloomberg notes, the  global bond rout is intensifying, sending U.S. 30-year yields above 3 percent for the first time since January, and the 2-year yield above 1% for the first time since January on speculation that inflation will quicken as Donald Trump tries to increase spending to boost the world’s largest economy.

“Yields will continue to rise over the next year,” said Hiroki Shimazu, an economist and strategist at the Japanese unit of MCP Asset Management in Tokyo. “The fundamentals are very strong, particularly in the U.S. There are some signs of higher inflation pressures. Trump is pushing this phenomenon.”

Benchmark German 10-year bonds headed for their longest losing streak since May, and those on similar-maturity Italian debt climbed to the highest since July 2015. U.K. 10-year gilts extended their slide to a sixth day, pushing yields to a five-month high. Portuguese yields rose above 3.6 percent for the first time since October. Since the Nov. 8 election, developing-nation local-currency bonds tumbled 7.3 percent through Nov. 11, the biggest three-day slump since October 2008. The decline cut the bonds’ return this year to 8.5 percent.

Thirty-year bond yields climbed six basis points, or 0.06 percentage point, to 3.00 percent as of 10:08 a.m. in London, and earlier touched 3.03 percent, based on Bloomberg Bond Trader data. The 2.875 percent security due in November 2046 fell 1 3/32, or $10.94 per $1,000 face amount, to 97 21/32.

Government bonds also extended losses across the Asia-Pacific region. Thailand’s 10-year yield jumped by the most since May after foreign investors pulled a record 27 billion baht ($763 million) from the nation’s bond market on Friday, while similar-maturity debt in China dropped for a seventh day, the longest losing streak in three years.

“Trump has introduced so much uncertainty -- around the fiscal outlook, the outlook for foreign demand for Treasuries given his protectionism and his views on China, uncertainty around the outlook for the Fed,” said John Davies, an interest-rate strategist at Standard Chartered Plc in London, which adjusted its forecast for 10-year Treasuries yields to 3 percent in the end of 2017 from below 2 percent previously. “There’s an uncertainty premium, rather than just expectations of much more Fed tightening,” being priced into Treasuries, he said. “We think there’s room for this to continue.”

U.S. 10-year note yields jumped seven basis points to 2.23 percent.  The selloff wiped a record $1.2 trillion off the value of bonds around the world last week when Trump was elected U.S. president. Investors rotated into stocks, as global developed-market shares beat investment-grade debt by the most since 2011 amid concern the stimulus will stoke inflation and lead the Federal Reserve to raise interest rates. Pacific Investment Management Co. said the central bank may move three times by the end of 2017.

“Yields will continue to rise over the next year,” said Hiroki Shimazu, an economist and strategist at the Japanese unit of MCP Asset Management in Tokyo. “The fundamentals are very strong, particularly in the U.S. There are some signs of higher inflation pressures. Trump is pushing this phenomenon.”

The move marks a reversal from four months ago when benchmark Treasury yields fell to a record low of 1.318 percent. “Long-term interest rates seem to be bottoming out,” Pimco, which runs the world’s biggest actively managed bond fund, said in a post on Twitter Nov. 11.

As Goldman and Deutsche Bank both warned on Friday, keep an eye on yields: while it is unclear what the level is, with GS expecting around 2.50% while DB suggesting "somewhere around here", the US 10 Year will soon reach that level which makes further equity gains impossible due to both concerns imminent Fed rate hikes will tighten financial conditions, while growing fears that inflation will sap corporate profits will likely also result in equity selling in the near future.

“In the short-term the election of Donald Trump as president is causing a bit of uncertainty and markets tend to overreact to that,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which manages about $121 billion. “I suspect the dust will settle down in the next couple of months and this sort of market overreaction will provide opportunities.”

S&P 500 Index futures were down modestly, wiping out a gain of as much as 0.5%,  The Stoxx Europe 600 Index is likewise fading its early gains of 0.9%, after rallying last week by the most since July. The Index was supported by advances in miners and banks, seen as beneficiaries of Trump’s policies, with merger-and-acquisition activity also providing a fillip. Among the deals being discussed:

  • Siemens AG climbed 1.7 percent after agreeing to buy Mentor Graphics Corp. for $4.5 billion to expand its industrial software capabilities.
  • Intrum Justitia AB jumped 12 percent after Europe’s biggest debt collector said it is acquiring competitor Lindorff in a $1.96 billion deal.
  • Harman International Industries Inc. agreed to be acquired by Samsung Electronics Co.
  • Novartis AG was little changed after people familiar with the matter said the Swiss health-care company is in talks to acquire U.S. generic-drugs maker Amneal Pharmaceuticals LLC.

Meanwhile, with the Dow Jones flirting with all time highs again, the MSCI Emerging Markets Index fell 0.9 percent, headed for its lowest close since July 8.

* * *

Bulletin Headline Summary from RanSquawk

  • European equities trade higher across the board with financials once again leading the way higher with markets eyeing Trump's latest key appointments
  • USD strength continues to be the main theme of FX markets with the USD-index breaking above 100.00 to the upside
  • Looking ahead, highlights include ECB's Draghi, Praet, Fed's Kaplan, Lacker and Williams

Market Snapshot

  • S&P 500 futures up 0.4% to 2169
  • Stoxx 600 up 0.9% to 341
  • FTSE 100 up 1% to 6800
  • DAX up 1% to 10770
  • German 10Yr yield up 5bps to 0.36%
  • Italian 10Yr yield up 12bps to 2.14%
  • Spanish 10Yr yield up 12bps to 1.59%
  • S&P GSCI Index up less than 0.1% to 351.5
  • MSCI Asia Pacific down 0.5% to 135
  • Nikkei 225 up 1.7% to 17673
  • Hang Seng down 1.4% to 22222
  • Shanghai Composite up 0.4% to 3210
  • S&P/ASX 200 down 0.5% to 5346
  • US 10-yr yield up 7bps to 2.22%
  • Dollar Index up 0.73% to 99.78
  • WTI Crude futures down 0.3% to $43.27
  • Brent Futures down 0.1% to $44.69
  • Gold spot down less than 0.1% to $1,227
  • Silver spot down 0.1% to $17.35

Global Headline News

  • Samsung to Buy Harman for $8 Billion Cash in Automotive Push: Harman gets more than 65% of sales from automotive sector
  • Siemens Buys Software Maker Mentor Graphics for $4.5 Billion: Deal is Siemens’s biggest since Dresser-Rand two years ago as it seeks to expand in industrial software
  • Priebus Named Trump’s Chief of Staff, Bannon as Strategist: Twin appointments are an attempt to balance the alternative right, represented by Stephen Bannon, with the establishment Republican Party, represented by Reince Priebus
  • Trump’s Infrastructure Plan to Cost $1t, Scaramucci Writes in FT
  • Trump Says May Deport Up to 3 Million Undocumented Immigrants
  • Novartis Said to Hold Talks to Buy Generics Maker Amneal: Amneal could be valued at as much as $8 billion in a sale
  • China Economy Holds Ground Amid Curbs to Cool Housing Market: Industrial production, fixed-asset investment remain resilient
  • Trudeau Clears Path for Canada to Approve Kinder Morgan Pipeline: Green measures give PM political cover for Dec. 19 decision
  • ‘Dr. Strange’ Beats 3 New Releases to Hold Box-Office Lead

* * *

Looking at regional markets, we start in Asia where stocks traded mixed following a similar close last Friday on Wall St, where post-election gains lost steam amid weakness across the energy complex, in which both WTI and Brent crude futures declined by over USD 1.00/bbl. Nikkei 225 (+1.7%) outperformed amid JPY weakness and a firm Q3 GDP release. ASX 200 (-0.6%) closed in the red as energy and mining sectors weighed on the index after gold extended on Friday's USD 30/oz slump. Hang Seng (-1.4%) conformed to the downbeat market conditions following gains in HK money market rates and disappointing Chinese data in which New Yuan Loans, Aggregate Financing, Industrial Production and Retail Sales all missed expectations, while Shanghai Comp (+0.5%) was underpinned from a firm liquidity injection by the PBoC. Elsewhere, a story in the WSJ that President-elect Trump chose Republican National Committee Chair Reince Priebus as White House Chief of Staff has led US equity futures higher with Mini Dow Jones trading higher by nearly 100 points, as some have suggested that this move by Trump is positive and hinted of a more conventional approach. 10yr JGBs extended on Friday's lows amid the advances seen in Japanese stocks, while a firm GDP release also dampened hopes for BoJ action. Japanese GDP (Q3 P) Q/Q 0.5% vs. Exp. 0.2% (Prey. 0.2%); Annualized Y/Y 2.2% vs. Exp. 0.9% (Prey. 0.7%).
Chinese Industrial Production (Oct) Y/Y 6.1% vs. Exp. 6.2% (Prey. 6.1%); YTD 6.0% vs. Exp. 6.1% (Prey. 6.0%). Chinese Retail Sales (Oct) Y/Y 10.0% vs. Exp. 10.7% (Prey. 10.7%); YTD 10.3% vs. Exp. 10.4% (Prey. 10.4%).

Top Asian News

  • Exports Drive Japan’s Economy to Unexpectedly Strong Growth: Net exports, or shipments less imports, added 0.5 ppt to GDP
  • Hong Kong Said to Plan to Allow Leveraged ETFs of Local Stocks: Regulator plans to approve local indexes in 2017 after review
  • Mizuho Profit Beats Estimates as Tax Gain Offsets Loan Slump: 2Q net 225.5b yen vs est. 182.2b yen
  • Alibaba Wants Its $18 Billion Singles’ Day to Be More, Mean Less: Company has been downplaying gross merchandise volume metric
  • PLDT to Complete December Refinancing Facilities for 2017 Debt: $470m of committed refinancing already signed

In Europe, the risk on sentiment has seen equities spend the morning in the green (DAX: +1.1%), with financials outperforming as has been the case since the Trump transition team confirmed that the president elect remains keen to repeal Dodd Frank Act. Outperformance in financials has been exacerbated by the latest merger talk, with Ansa noting source reports of a potential merger between Unicredit (+2.5%) and SocGen (+1.9%), although both companies have refused to comment on any rumours. Finally, fixed income markets have continued to see pressure as with T-notes running in to sellers amid reports of 1480 block trade sell order overnight, keeping the price around the lows. Bunds opened below the psychological 160.00 level to head into mid-morning lower by 60 ticks. The periphery has seen the 10Y PGB/Bono spread widen this morning as EU's Moscovici reiterated that they are waiting for a new draft for the Spanish budget, in order to confirm to 2017 deficit targets, with reports suggesting PM Rajoy could call a snap election if congress were to refuse to pass his budget.

Top European News

  • EU Offers Trump Cooperation While Signaling Policy Firmness: Europe draws red lines on climate, Iran, Russia positions
  • Brexit Threatens to Ignite European Skirmishes Over EU Budget: Focus on 12.8 billion euros of spending shifts in 2017-2020
  • Brexit Costs U.K. $82 Billion in Lost Company Spending: Study shows more than 40% of U.K. businesses have delayed or canceled investments since the vote to leave the European Union
  • CME Said to Consider Dublin Clearing Options Amid Brexit Fallout: Exchange’s European clearinghouse considers links in Ireland as part of effort to maintain access to European Union customers

In currencies, the Bloomberg Dollar Spot Index jumped 0.7 percent, rising for a fourth-straight day, and set for the largest gain over such a period since 2009. The euro fell versus the greenback for a sixth day, its longest run of declines in six months, dropping 0.9 percent to $1.0760, a level last seen in January. The yen sank 1.2 percent and touched its weakest level since early June. Japan’s economy expanded by an annualized 2.2 percent in the last quarter, data showed Monday, exceeding the 0.8 percent expansion forecast in a Bloomberg survey and easing pressure on the Bank of Japan to add stimulus.“The dollar is strengthening along with the rise in U.S. yields, reflecting expectations for economic expansion from fiscal spending,” said Yunosuke Ikeda, Nomura Holdings Inc.’s head of Japan foreign-exchange research in Tokyo. “Japan’s 2 percent growth can be used as a reason for the BOJ not lowering interest rates for a while.” The pound fell 0.7 percent to $1.2514, wiping out a 0.6 percent gain last week. The Swiss franc advanced to the strongest level since June 24 against the euro. New Zealand’s dollar dropped to a one-month low after an earthquake rocked the country early Monday. South Korea’s won dropped to its weakest level since June amid growing calls for President Park Geun-hye to be impeached over an influence-peddling scandal, while China’s yuan slid to a six-year low. Mexico’s peso fluctuated after a Trump adviser hinted in a Financial Times opinion piece that the president-elect is open to negotiations before imposing import barriers. It tumbled 12 percent in the three days following the election of Trump, who had campaigned on promises to tear up the North American Free Trade Agreement, crack down on illegal immigration, and build a wall along the southern U.S. border.

In commodities, copper rallied as much as 3.4 percent in London. It surged 11 percent last week as Trump pledged to spend more than $500 billion rebuilding U.S. infrastructure and Chinese investors stepped up purchases. All base metals except tin advanced on the London Metal Exchange. Iron ore climbed to a two-year high on the Dalian Commodity Exchange as data showed rising steel output in China, the world’s largest steelmaker. Goldman Sachs Group Inc. said the initial reaction of iron ore and copper prices to the infrastructure spending proposed by Trump has been excessive and analysts reiterated their view for sequentially lower prices. Gold touched a five-month low, after sliding last week by the most in three years as the prospect of Fed rate increases strengthened the dollar. Oil slipped 0.4 percent as Iran boosted output and as U.S. explorers raised the number of active rigs to the most since February, signaling the persistence of a global supply glut.

On today's US economic calendar there is little of note, however there will be a lot of Fed speakers with Kaplan, Lacker and Williams all speaking later today.

US Event Calendar

  • 10am: ECB’s Draghi speaks in Rome
  • 1:20pm: Fed’s Kaplan speaks in Wichita Falls, Texas
  • 5pm: Fed’s Lacker speaks in Chestertown, Md.
  • 6:30pm: Fed’s Williams speaks in San Francisco
  • 7:30pm: Reserve Bank of Australia issues meeting minutes

* * *

DB's Jim Reid completes the overnight event wrap

If you're feeling irritable, depressed, with aggressive tendencies this morning it might have nothing to do with the events of last week. Instead it could be today's 'super' supermoon which adorns the night sky and brings our satellite 31,068 miles closer to us than it's furthest point in its orbit to what will be the shortest distance away from earth since 1948. If you feel the urge to howl like a werewolf try to hold it in until the moon starts retreating tomorrow or risk blowing your cover.

This week will really all be about President-elect Trump's public comments and also those of his Republican party. The market is this morning reacting to Trump's appearance on CBS's 60 minutes program last night and also the significant early personnel appointments within Trump’s team, also announced late last night.

With regards to the former, much is being made of the fact that Trump said he may be willing to compromise and leave certain parts of the existing Affordable Care Act as is, when he starts on his own initiative, and so indicating a slight softening on his initial views that Obamacare would be repealed. Unsurprisingly the TV interview also had a big focus on Trump’s immigration plans. The President-elect confirmed his intentions to deport or jail up to 3 million undocumented immigrants who had a criminal record but at the same time ‘make a determination’ on the remaining 8 to 9 million undocumented immigrants whom he also called ‘terrific people’. There was also a focus on financial regulation which he intends to make an urgent priority, reiterating that the Dodd-Frank Act will be ripped up or made smaller to allow ‘banks to lend again’.

That other important news to highlight this morning is the announcement of the key appointment of Reince Preibus, the chairman of the Republican National Committee, as Trump’s chief of staff. Campaign chairman, Stephen Bannon, has also been appointed as Trump’s chief strategist and senior counsellor. The suggestion is that the appointment of Preibus in particular will be seen as a somewhat market-friendly outcome, given his strong ties with Paul Ryan. He is also the candidate most likely seen as co-operating with Congress and promoting strong ties in Washington, alongside having a softer stance on certain policy matters. As the Washington Post made mention to, the ‘choice signals Trump’s willingness to work within the very establishment he assailed on the campaign trail’. The appointment of Bannon on the other hand is, as the BBC aptly presents, Trump ‘keeping an outsider devil on his shoulder’. It’ll be interesting then to see how the balance between the two appointments plays out in reality.

Staying with this subject, tomorrow the House Republican Conference will hold its closed door leadership election. The chatter is that Speaker Paul Ryan will hold onto his current post following the clean sweep by the Republicans after there had been some question marks in the run up to the election. Tomorrow Ryan will need a majority of only-elected and new Republicans to be nominated, before then facing a vote by the full House in early January where a majority is needed.
So as we refresh our screens this morning it’s been a broadly mixed start across Asia, although bourses have also had some important economic data releases to contend with. In Japan the Nikkei is +1.58%, helped by a better than expected Q3 GDP print for the country (+0.5% qoq vs. +0.3% expected) which was boosted by a bounce in net exports. In China the Shanghai Comp is +0.35% following more mixed data there. Industrial production in October was unchanged at 6.1% yoy but missed relative to the 6.2% consensus, while retail sales softened from 10.7% to 10.0% yoy (vs. 10.7% expected). There was better news with the fixed asset investment data however, where investment rose one-tenth to 8.3% yoy (vs. 8.2% expected). It’s worth also noting that the PBoC fixed the trading band for the renminbi at its weakest level since September 2009 this morning, following the recent bounce for the Greenback. Meanwhile, the Hang Seng (-1.17%), Kospi (-0.22%) and ASX (-0.80%) are all in the red, although US equity futures are up about +0.40%. Having been closed on Friday, 10y Treasury yields are up 4.6bps at 2.196% and Gold (-0.66%) has continued to weaken.

Moving on. We will soon all be focused on the upcoming Italian Senate reform which would have been a big deal even without a Trump victory but has now got even greater focus. DB's Marco Stringa has upped his probability of a rejection to 60% from 55% previously. He also has just published a joint note with our fixed income and equity strategists which looks at every scenario imaginable in the weeks and months after the vote in 3 weeks. Marco still feels that even with a rejection being his central-case scenario, there is unlikely to be an immediate general election but a muddle-through government formed with limited scope and limited duration. Even a victory for Renzi might only postpone the risk (not remove it) of the worst case scenario for markets of a 5SM Government/coalition, a non-binding referendum on Euro membership and an 'out' vote (remember the Brexit referendum is technically non-binding too). The note puts the probability of this 3 stage worse case scenario somewhere between 2-15% depending on the different outcomes. If you love flow charts and scenario analysis then this is the research report for you. When thinking of these probabilities our take is to remember that in the middle of 2015 some were suggesting the probability of Trump winning the Republican nomination alone were around 1% and his probability of being President 150-1 at a similar time. So we live in unpredictable times. Thankfully my job isn't to make predictions.... oh hang on it is!!

Another note that we want to highlight for readers this morning comes from our HouseView team. In light of the Election result, they have published a report entitled “A potential game changer”. They note that despite criticism of some of Trump’s policies, they could provide a material boost for growth and, in return, for risk assets, if they are implemented well. The team highlights that he has pledged a large fiscal stimulus, ambitious tax cuts and reduced regulation. The fiscal plan would represent the first tangible shift away from the policy mix that has prevailed since the crisis -- very accommodative monetary policy compensating for tight fiscal policy -- and that many investors have been hoping for this over the last year. At the same time the team also note that there is a risk that these policies will not be fully implemented, especially given that Trump’s fiscal plans could lead to a larger deficit than Congress will allow. This means that policy uncertainty will prevail for the time being. Moreover, not all of Trump’s proposals are positive. The biggest threat to growth is a possible protectionist turn, which could depress global trade and even trigger trade wars. A further risk is that Trump’s successes result in political spillovers to the upcoming elections in Europe by strengthening the fringes of the political spectrum.

Back to markets and quickly reviewing Friday which, following an exhausting week and despite a US holiday, was still a turbulent day for bond markets. It was the periphery which really suffered with 10y BTP’s finishing +12.2bps higher in yield and closing above 2% (2.018% to be exact) for the first time since July 2015. The post election move for BTP’s is just shy of +27bps higher, while Spain and Portugal were +8.4bps and +8.7bps higher in yield on Friday respectively taking the post election move to around +20bps. 10y Bunds finished at 0.305% on Friday and a little over 3bps higher on the day (10.5bps since the election) but still the highest yield since March this year. The pain in EM continued meanwhile. 10y local currency Mexican bonds were +17.9bps higher in yield on Friday and over +100bps higher post election. In FX there were losses of greater than 1% on Friday for the likes of the Mexican Peso, South African Rand, Chilean Peso and Argentine Peso while equity markets in Mexico (-0.54%), Brazil (-3.30%), Chile (-1.51%) and Colombia (-1.55%) were sold in tow.

That compared to a smaller -0.14% loss for the S&P 500 although the Dow did close +0.21% and extended its record highs. The wide dislocation across sectors is dominating still though. Industrials gained again on Friday while the S&P 500 banks index rose +0.40% and took its post election gain to an impressive +9.8%. Energy stocks were weak on both sides of the pond however with WTI plummeting -2.80% to close below $44/bbl as OPEC supply concerns remain elevated. It was the moves across the metals complex which really stood out on Friday though. Gold plummeted -2.51% and so capped the worst week (-5.93%) for the precious metal since June 2013. The intraday high to low range for Gold last week was actually a fairly incredible 8.83%. Meanwhile, Silver plummeted -6.68% on Friday and across base metals Copper (-1.65%) finally weakened for amazingly the first time in 3 weeks. Other base metals also weakened with the exception of Iron ore which rallied +7.68% to take its weekly gain to nearly +23% with the China credit stimulus story in full flow.

Away from the market moves, datawise it was another fairly quiet day. The preliminary University of Michigan consumer sentiment survey appeared positive at first glance with the November headline consumer confidence reading rising 4.4pts to 91.6 (vs. 87.9 expected) with both the current conditions and expectations components up, but it was noted that the survey period covered October 28th through to election day so we’ll have to wait for further revisions to get the full impact from the result. That said, inflation expectations also moved up encouragingly while Fed Vice-Chair Fischer also highlighted on Friday that in his view the Fed is moving closer to achieving both the inflation and employment components of its dual mandate and so ‘accordingly, the case for removing accommodation gradually is quite strong, keeping in mind that the future is uncertain and that monetary policy is not on a preset course’.

Turning over to the week ahead now. In terms of data, it’s a very quiet start to the week today with the only data this morning in Europe being the industrial production report for the Euro area. There’s nothing due out in the US this afternoon. We kick off tomorrow morning in Germany where the preliminary Q3 GDP report will be released. Shortly after that we get CPI in France and the full inflation data dump in the UK. Thereafter we get Q3 GDP for the Euro area and the November ZEW survey out of Germany. We’ve got important data in the US tomorrow too with October retail sales, September business inventories, November empire manufacturing and also the October import price index. Turning to Wednesday, the early data comes from the UK again with the September and October employment report. It’s another busy session in the US on Wednesday with October PPI, industrial and manufacturing production and also the NAHB housing market index print for this month. We kick off Thursday in France again where we’ll get Q3 employment numbers. Thereafter the UK reports October retail sales data before we get the final October CPI revisions for the Euro area. Over in the US on Thursday the big focus will be on the October CPI report, while housing starts, building permits, initial jobless claims and the Philly Fed PMI round off another busy day. Friday morning it’s the turn of China where the October property prices data will be out. Over in Europe the only data of note is the PPI report in Germany while in the US we finish the week with the leading index and Kansas City Fed manufacturing survey.

Away from the data, it’s an absolutely packed week for Fedspeak. Today we have Kaplan, Lacker and Williams all speaking tonight. Tomorrow we have Rosengren, Tarullo, Fischer and Kaplan all speaking from midday. On Wednesday it’s the turns of Bullard, Kashkari and Harker. Thursday is the big one with Fed Chair Yellen testifying before the Joint Economic Committee, while Brainard will also speak. On Friday we’ve also got Bullard, George and Kaplan on the cards. Meanwhile, over at the ECB we will hear from President Draghi today when he attends an event in Rome. With it also being Euro Finance week there is a steady stream of speakers throughout the week in Frankfurt. This year’s conference is called “Brexit, Banking, Bubbles – Chances and Risks in the New Normal”. If that wasn’t enough, in the UK BoE Governor Carney is scheduled to testify before Parliament on Tuesday. The other event to note is the scheduled meeting between President-elect Trump and Japanese PM Abe on Thursday.

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Sunny2's picture

Looks like market really expects rate hike this time

NoDebt's picture

It does.  Let me make the case for it NOT happening.  The further you repress interest rates below inflation the greater the effect of it.  If inflation is low, you might have to go negative.  If inflation is higher just holding rates where they are has the same effect.  Don't forget the recent comments about the Fed considering allowing the economy to "run hot" for a while.  It's still a pretty easy cop-out for the Fed to cite "uncertainty" around recent elections and punt on an increase once again.

Make no mistake- the Fed wants higher rates.  They just want it to happen without the pain of actually having to raise them.  And that pain is considerable.

B-Bond's picture

Martini shaken not stirred.

Place your bets!

Paul Kersey's picture

Speaking of scary currency changes, the Indian Government is scraping Rs 500 and Rs 1000 notes, to kill the black market. 1000 rupees sounds like a lot of money, but it is actually worth less than $15. The EU has encouraged this change in India's currency. This is probably the beginning of a worldwide currency crackdown. The Indian Government said that too many people are operating through the black market and not paying taxes.

J S Bach's picture

Turmoil, bloodbaths and routs, oh my.  Turmoil, bloodbaths and routs, oh my.  TURMOIL, BLOODBATHS AND ROUTS, OH MY.  TURMOIL, BLOODBATHS AND ROUTS, OH MY!!!!

TeaClipper's picture

Well Im sure the Indian's will need very little encouragement to trade in silver and gold.

nmewn's picture

But what about all the Faaarrreee! stuff? ;-)

Gunga's picture

Brexit and Trump have been solid hits against the elitist, globalist establishment. Don't fall for the Soros funded lies of the establishment media.

rmopf2010's picture

4 December 2016 Austrian presidential election And Italian Referendum on same date

Anyone? knows best forums so we the "Freedom Fighters/Deploerables" can assist our Human Brothers? main english media in Panic mode

 comments off :(

AmandaFawndel's picture

So Rinsed Peenus as Chief of Staff was a real outsider, anti-establishment goyim sheepletards crack me up!

espirit's picture


Hey roxyNL agi-prop, AmandaFawndel agi-prop, babablome agi-prop - missed you all weekend. Your other weekend shifts couldn't hold a candle to your repetitious insults, so good on for making the big bucks. Say hello to Jane agi-prop for us, she didn't last long - I saw her over at MSN, WaPo, or one of the other butt wipe fag rags, their comments are moderated so she's got it easy.


Just wanted to let you know your group are considered enemy combatants now, but that probably wouldn't concern you from that basement in Tofuckistan.


Waiting on 'First Blood', if you haven't seen it - you should.


Since you are an enemy combatant working in occupied territory, you just got a promotion to Agent Provocateur with the perks reserved for 5th columnists, you deserve it. We offer special discounts to the Holy Land Heaven, or wherever you want to go to pork virgin goats, just send us your IP address for the coupon.


Anyway, say hello to your bot-buddy Peggy, or whatever you call him.




King Tut's picture
King Tut (not verified) espirit Nov 14, 2016 8:04 AM

He's been around ZH a lot longer than you- you just don't know it

espirit's picture

I know it but upvoting it is like death from a thousand cuts.

Sorta like a Tyler/MDB.

Some 11 week newbies get their panties in a wad.

Peggy, is that you?

Last of the Middle Class's picture

I'm sure a rate hike is in the works, Trump has to be punished for daring to run for office and lordy, lordy of all things WINNING! One thing for sure, the first social media run election was a total fucking disaster for the socialist global elites. Dontcha just hate it when that happens!

Arrest Hillary's picture

Arrivederci Roma .... Rexit ?

Heroic Couplet's picture

Good. Wall Street can be reduced to 1929 levels for number of stocks and traders employed  When both indicators drop below 1929 levels, then maybe someone should worry.

Arnold's picture

How do you lay off a machine or a laser data line?
Accelerated amortization?

Never One Roach's picture

10 years at 3%.

People may be able to get some yield on their savings acct once again.

Arnold's picture

Yeah, well, most of my savings are in Equities, Bonds and Annuities.

You money guys can mess with them as much as you want. Its got to last me another 25 years.

bada boom's picture

Trump expected this.  That is why he said rates would rise and the markets will fall.  Brilliant.  I didn't see it back then, but it is apparent now. 

I remember reading long ago, the fed doesn't control rates, it follows them. Looks like its true.

wmbz's picture

"Trump has introduced so much uncertainty -- around the fiscal outlook"

LOL! No Shit? It was all so certain before Trump.

Oleg the Man's picture
Oleg the Man (not verified) Nov 14, 2016 6:52 AM

The 2016 U.S. election was likely one of the most closely watched events of all time, especially considering the race was between America’s own version of Adolph Hitler and its female incarnation of Dick Cheney. As such, it provided a unique opportunity for politicians in America and elsewhere to take all manner of actions that will undoubtedly slip through the cracks within the mainstream media.

Here’s What Happened in Syria While Everyone Was Watching the Election
Azannoth's picture

Had Hillary won we would have seen an initial surge in the stocks and than a slump

with Trump it's simply the other way around 1st we get the fall than we can rise again.

I would load up on Gold/Silver as soon as 1st signs of an uptred start.

King Tut's picture
King Tut (not verified) Azannoth Nov 14, 2016 8:07 AM

Yeah- you load up- your favorite PM dealer's wife needs a new car.

bruinfan's picture

Make treasury bonds great again!

Will we see a return of the fat yields on the 30-year treasuries?

realWhiteNight123129's picture

The Donald seems to have popped the bond bubble, and once the curve steepens, you know that M0 is finally going into the circulation of goods and services, because a steep yield curve is what a banker loves. If the short term rates are higher than the long term rates, the borrower would only shorten the maturity if the rates are lower, while the lender would only want to extend the maturity if the rates are higher. So no lending occurs... When the curve steepens, all of that changes, watch the multiplier next !!!



Sid Davis's picture

Looks like the FED is losing control.  Could the 10 year treasury go to 7% by September, 2018?  Could gold go to $650 by September, 2018?  Can the stock market do anything but move in a sideways channel during that same time frame?

Based on cyclical forces, these moves are more than just a remote possibility. 

Kina's picture

Frankly when ever you run across a real Troll - don't answer them, don't vote them up or down.

When people scroll they tend to read the posts with a number of Up or Down votes.


  • So if you vote a Troll down - you are helping him.

And we know ZH is attracting a bunch here just to Troll only, and some just to vent their hate on jews.