CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Yen yields shares trifecta threatens Yellen autopilot

Article By: ,  Financial Analyst
February 3, 2014 4:55 PM

The trifecta of declines in bond yields, US equities and USDJPY (rising yen) is a rare but classic reflection that existing concerns of emerging markets contagion may be compounded by worries over slowing growth in the US.

An extension of this negative trifecta would deal a serious blow to the notion that Fed tapering remains on auto-pilot.

- The question is not whether the biggest decline in ISM manufacturing since October 2008 (in percentage terms) was related to weather but to what the extent. The 0.1% rise in December construction spending (4-month low) confirms also confirms that weather was a factor.

- The 13.2-pt plunge in New Orders to 51.2 exceeded the 12.4 drop in October 2008 and 8.6-drop in October 2001.

- Recall the 4.3% decline in December durable goods was not associated with bad weather but a sudden drop in high-ticket capital items.

- Markets may be comforted by the growing notion that more policy clarity and stabilisation will be seen in emerging markets by the time the FOMC meets in March and the Fed would have received two US jobs reports and provide more visibility with regards to the fate of the taper program.

- If weather were the main factor in damaging today’s US data releases, then it could be the factor in propping Friday’s January jobs report as the normalisation from bad weather and govt shutdown resurfaces and giant positive appears in the NFP of the unemployment rate.

Yellen’s Congressional testimony = equivalent to February FOMC

Fed Chairwoman Yellen’s Congressional testimony next week could potentially exacerbate the current sell-off in EM and US equities if she is interpreted to signal that tapering will remain on autopilot despite the developments in emerging markets and any deterioration in US asset markets. As long as equities and bond yields extend their downward movement to the extent that the 10-year falls below 2.45% would be a reflection of serious concerns by bond traders, in which case may bring the auto-pilot to a temporary pause.

 

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024