Weekly News Roundup

Several weeks ago I took up the subject of interest rates and their prospects moving forward. There has been a lot of back and forth over the subject of the Fed “tapering” off purchases of Treasury (and other) securities as it sees economic conditions improve. Predictably, the markets have been waved back and forth by the interpretations of comments by Bernanke and anyone else of note who talks about monetary policy. At this point, things seem to have stabilized a bit. This Zero Hedge post indicates that most Wall Street shops think September will be when the Fed starts to back off its monthly purchases.

One of the reasons that has come up lately is the prospect of reduced Treasury issuance. As this Business Insider article points out, smaller US federal deficits are expected to see a steady decline in how much paper the government will be selling each year. If the Fed were to keep buying it would really hamper Treasury market liquidity (which it has already impacted by sucking up so much of the supply). If the Fed lowers purchases by the same amount as the Treasury reduces supply then there will be no net impact on supply/demand.

Of course it’s the prospect of the Fed tapering purchases off even faster than the Treasury cuts back on selling which has participants worried about the prospects for interest rates. That was the focus of my prior piece and is primarily going to be a function of the economy and the Fed’s expectations for it moving forward.

Back at the start of June when my previous article was posted I indicated that 2.40% on the US 10yr Note yield was going to be important (resistance in the form of a pair of prior peaks in 2011 and 2012). The fact that the market blew right through there tells us a lot about its strength (or weakness in price terms).

I do think the market is due for a bit of a breather, though. Notice in the weekly chart below how wide the Bollinger Bands have gotten of late (bottom plot being the Band Width indication).

With the Bands wider than they were in 2012 and not far off the 2011 peak, this is a good time to look for a least a little bit of a break. Given the way markets often go into snooze mode during the August dog days, and the expectation that September will bring interesting developments, this is as good a time as any for rates to settle into a range and consolidate ahead of the next move. The 2.40% level now is nearby support, with the 2.10% breakout point from earlier in the year a key level below there.

Our Two Cents – Week of 5/29/12

Summer has arrived. After last weekend’s gorgeous weather in Boston as we honored Memorial Day, we erased our cravings for hamburgers and hot dogs and replaced them with hunger for some knowledge of the currency markets.

In the U.S., economic optimism continued. The May Thomson Reuters/University of Michigan’s index on consumer sentiment rose to its highest level in four years. According to the survey, consumer sentiment increased to 79.3 from 76.4 in April. The highest jump since October 2007, the survey also showed half of all consumers felt the economy has improved during the last year. Jobless claims, which remained at 370,000, also illustrated economic stability.

While conditions in America painted an optimistic picture, images abroad weren’t cast in the same stroke. Greece remained much of the focal point as the country devised plans for a parallel currency to the euro, should it withdraw from the region. Sergey Shvestov, vice president of Russia’s Central Bank, said Greece’s departure from the eurozone was necessary, and it would be a “good example” for other countries. Facing discussions about debt issuances, German Chancellor Angela Merkel defended her opposition about why bonds won’t solve the eurozone’s problems, saying such tools wouldn’t get to the root of the problem. Ultimately, the Organization for Economic Cooperation and Development warned the 17-member region that a severe recession looms if its governments and central banks don’t act quickly to improve economic conditions.

For hedge funds, an overwhelmingly majority of them added compliance staff since 2008, according to a new survey. Hedge fund redemptions for May 2012 upped 3.31 percent, according to the GlobeOp Forward Redemption Indicator.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 5/21/12

Even though the unofficial start of summer kicks off this Memorial Day weekend in Boston, flip flops and sunscreen were out in full force last weekend. What was the temperature of financial markets from the past week? Read on to find out.

In the U.S., the economy was picking up after an early spring slump. Data showed growth in the April-June quarter is off to a good start, thanks to falling gas prices and solid hiring gains. Manufacturing and housing continued to show signs of economic expansion as factory bookings for long-lasting goods rose 0.3 percent last month, according to a May 24 Commerce Department report. Other numbers showed purchases of existing and new houses also increased. In the business sector, about 72 percent of startup CEOs reported thoughts of economic optimism this year in a study conducted by Silicon Valley Bank.

For the eurozone, unfortunately, there haven’t been too many signs of economic confidence after fiscal turmoil continues in Greece. The country is facing a possible exit from the eurozone that could cost the region hundreds of billions of euros. Greece’s financial minister said he expects the financial disorder to last about 12-24 months, allowing time for Greece to decide if it wants to stay in the single eurozone currency. As Greece struggles with itself, European leaders have prepared crisis-fighting plans for discussion at an informal EU Summit this week. According to the European Central Bank, officials said the eurozone needs growth and austerity.

In April, hedge funds upped 0.12 percent, according to the HFRX Global Hedge Fund Index, which puts their year-to-date gain at 3.27 percent.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 5/14/12

Rain, rain, go away. While Boston has been under rain showers for the past week, and recovering from the Celtics loss May 14, we drizzled some of the top headlines from the financial markets into this week’s roundup.

In the U.S. the economy continues to show signs of improvement. Jobless claims now stand at 367,000—1,000 less than last week, and job openings in March are the highest in almost four years, as employers advertised 3.74 million job openings. Additionally, economic confidence remains steady at -18, up slightly from the previous week and slightly better than the -20 average for the month of April.

In the eurozone, the German economy grew by 0.5 percent in Q1 2012 after it contracted 0.2 percent in Q4 2011. Economists predicted a growth rate of 0.1 percent, and some experts speculated Germany—the economic backbone of Europe—could help save the eurozone from recession. Macroscopically for the eurozone, economists predicted an economic growth of 1 percent for 2013, with the European Commissioner for Economic and Monetary Affairs Olli Rehn saying “a recovery is in sight” for the area. After Greece entered its second week without a government, the European Commission hoped the country would remain part of the eurozone, not withdrawing from the region and returning to its drachma form of currency.

For hedge funds, they saw an inflows increase of 1.24 percent so far in May, according to the GlobeOp Capital Movement Index.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 5/7/12

After watching I’ll Have Another race for the crown in the 138th Kentucky Derby last weekend, we’ll have another pass at our biggest headlines in the financial markets.

In the U.S., the economy added 115,000 jobs in April as the unemployment rate dropped to 8.1 percent from 8.2 percent. While the April figures registered less than initially forecast, economists said there wasn’t a reason to panic yet because the warmer winter months could have encouraged employers to start their spring hiring early. The private sector posted a gain of 119,000 jobs, according to ADP.

In the eurozone, France and Greece held their elections. French voters elected Francois Hollande, who is a champion of government stimulus programs, after he campaigned on the need for more growth-generating economic policies and less dependence on austerity. Greece’s election caused more uncertainty in the eurozone as voters leaned toward extremist parties, making it difficult to form another government that would support the country’s rescue package. As a result, the nation may hold another election in the next couple of months. Additionally, Spain announced its decision to help its banks by presenting measures to the banking industry. Officials said they would not rule out lending or introduce public money into the banking sector if necessary. For the eurozone’s jobs, high unemployment continued to rock nations as the 17 euro-using countries faced an unemployment rate of 10.9 percent.

For alternatives investments, hedge funds increased slightly in April, with the HFRX Global Hedge Fund Index reporting a 0.12-percent gain. The UCITS hedge fund assets under management increased in Q1 from 113 million euros to 120 million euros, a jump of 6.2 percent.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 4/30/12

While we’re still recovering from the Boston Bruins’ devastating playoff loss against the Washington Capitals last week, we tossed the sports pages for the business section to see how the financial markets scored.

While the U.S. economy only grew 2.2 percent in Q1 2012, there were signs that the economy thrived in the right places, including consumer spending. Personal consumption rose by 2.9 percent, exceeding expectations for a 2.3-percent rise, and up from 2.2-percent growth in Q4 2011. Personal incomes in March increased by the most in three months, as the Commerce Department said consumer income rose 0.4 percent last month. Confidence in the global economy grew substantially, according to the Q1 2012 ACCA/IMA Global Economic Conditions Survey, the largest global study of professional accountants. Thirty-two percent of respondents said they saw an uptick in U.S. business confidence, versus 18 percent in Q4 2011.

While Americans are feeling more financially confident, many are still uneasy about investing in the stock market. According to a new poll from Bankrate.com, about three-fourths of respondents said they were less inclined to investing in the stock market than they were a year ago. Perhaps it’s because of the stock market’s volatility, and they should consider methods of alternative investing. Speaking of alternative investments, hedge funds have outperformed other asset classes during the last 17 years, according to new research from KPMG and a hedge fund lobby group.

In the eurozone, Greece held talks with its international creditors about delaying by one year its medium-term deficit goals, working to ease the ongoing austerity measures on the economy. Across Europe, British Prime Minister said the continent was not “anywhere near half-way through” the economic crisis, but the German government said they’re more optimistic than Cameron about Europe’s financial stability. Cameron’s commentary came at a time when his country fell into a double-dip recession.

 


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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 4/23/12

We enjoyed some warm weather in Boston this past weekend before rain pounded the city, but the inclement forecast didn’t dampen our perspectives about the currency markets.

In the U.S., unemployment aid requests remained near a four-month high as weekly jobless claims totaled 386,000. While economists said the March figures were weaker than previous numbers, they downplayed them, saying that the warmer winter may have led to some early hiring in January and February.

In the eurozone, the European Commission said Greece should now have enough money to stick to its economic reform program as the country seeks to improve its financial instabilities. British retail sales increased 1.8 percent, surprising economists because the volume of sales dropped by 0.8 percent last month and were only expected to increase 0.4 percent this time.

For hedge funds, assets rose to new levels as they surged to $2.13 trillion at the end of the first quarter, beating the previous high of $2.04 trillion, set in the middle of last year, according to Hedge Fund Research Inc. The Dow Jones Credit Suisse Hedge Fund Index finished up 0.05 percent in March.

In the foreign exchange space, FXCM reported steady March FX volumes, with retail down 2 percent from February and institutional up 27 percent from February. Retail volume accounted $340 billion, and institutional volume totaled $161 billion.

 

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 4/16/12

The Boston Marathon has finished, the scorching weather has departed and another week has past. While cheering on the runners battling the heat—and Heartbreak Hill—during the 116th Boston Marathon, the financial markets also made a dash for themselves.

In the U.S., consumer confidence held to a four-year high as more Americans said their finances were in better shape. The Bloomberg Consumer Comfort Index posted minus 32.8 in the period ending April 8, second only to the prior week’s minus 31.4 as the highest since March 2008. Strong U.S. retail sales fueled economic growth in the first quarter, and analysts are optimistic that the economy grew at an annual pace of at least 2.5 percent during January-March. Also, the U.S. Federal Reserve said the country’s economy continued to grow at a steady pace since February. According to its latest national economic performance survey, the central bank said five districts, including Boston, reported moderate growth.

In the alternatives, hedge funds are rebounding in 2012 as investors have put more cash into hedge funds during the past month, according to GlobeOp. Now four months into 2012, hedge funds are off to their strongest start since 2006, with the average fund gaining nearly 5 percent in the first quarter of 2012. In 2011, more than 1,100 hedge funds launched, according to Hedge Fund Research.

In the eurozone, industrial production has risen for the first time since August 2011, showing signs of revived economic life for the region.

Strong retail sales ease growth worries, Reuters, April 17, 2012
Hedge funds attracting cash in 2012 rebound, Reuters, April 13, 2012
Consumer Comfort in U.S. Held Last Week Near Four-Year High, Bloomberg, April 12, 2012
US economy grows at steady pace: Federal Reserve, The Economic Times, April 12, 2012
New Sign of Economic Life in the Euro Zone, Institutional Investor, April 12, 2012
Hedge Funds Off to Best Start in Six Years, Wall Street Journal, April 11, 2012
HFR: Over 1,000 Hedge Funds Launch In 2011, FINalternatives, April 10, 2012

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 4/9/12

Spring has teed off as golfer Bubba Watson won his first green jacket at the 2012 Masters Tournament and the Easter Bunny delivered chocolates this past weekend. While we enjoyed some time with family and friends, we kept up with the latest news in the currency markets.

In the U.S., jobless claims in March tallied 357,000 as the unemployment rate dipped to 8.2 percent from 8.3 percent. While last month’s figures were less than anticipated, they still illustrated optimism of a rebounding economy. Economists said the U.S. economy, which is in its third year of expansion, is better equipped to overcome a slowdown in Europe and inflating fuel costs. Also, the private sector in March added 209,000 jobs, which aligned with expectations.

In the eurozone, Greece saw good news for its economy as the country’s prime minister said the nation could see a 2.5-to-3-percent growth during the next two years. Lucas Papademos said current forecasts show that Greece’s gross domestic product will start rebounding from five straight years of recession in the second half of 2013. The country also extended its deadline to April 20 for its final bond swap.

In Ireland, the Irish Central Bank showed signs of economic stability. Officials said the bank remains on track to meet its budget bailout targets and unlikely won’t need to bring in more spending cuts and tax increases in 2012.

Following their second-worst year in history, hedge funds posted a positive first quarter as the Dow Jones Credit Suisse Core Hedge Fund Index ended Q1 up 2.75 percent.

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 4/3/12

Fenway Park is revving for its centennial and the Boston Marathon is preparing for its annual run—two signs of April in Boston. In the currency markets, financial optimism, eurozone developments and alternative investment returns continue to show positive signs.

In the U.S., the economy is once again illustrating that it’s emerging as the main generator for global growth as markets improve, stock prices rise and personal-consumption expenditures increase. The country’s consumer confidence, which posted 70.2 in March, closed to the highest level in a year last month as a growing number of Americans said they planned to buy cars, homes and appliances.

In the eurozone, there are also hopeful indicators for an improving U.K. economy as its unemployment rate is 8.4 percent, less than the eurozone’s unemployment rate at 10.8 percent. While Greece may still face a long path for economic stability, German Chancellor Angela Merkel said Greece’s exit in the euro would be a “catastrophic” mistake to the area’s economic and political arenas. Greece’s eurozone sisters and the International Monetary Fund approved in March the country’s 130-billion euro rescue package to aid the nation until 2014.

Finally, hedge funds upped nearly 2.4 percent as of March 28, according to Bank of America Merrill Lynch Hedge Fund Monitor. In the first couple months of 2012, hedge funds returned 5 percent—the best start to a calendar year since 2000, according to Hedge Fund Research.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.