FX5: Yen Bull Eyes ¥105

Selasa, 14 Juni 2016

Wednesday, April 6: Five things the markets speak of

Yesterday, global equities were under renewed pressure with investors with a plethora of reasons to choose, ranging from overbought stock market, reports of suspicious gains, weakening oil prices, factory orders US Treasury department stuns the street with new rules of inversion, the lowest in Germany, a strengthening yen and a head of the IMF insisting that more government action is needed to fight against the global "slow."

However, today the market is going to want to take its cue from the Federal Open Market Committee (FOMC) minutes. The fixed income market will be hoping to get a better idea on the timing of the next Fed rate hike. While the rest of us want a better understanding of what prompted the Fed to reduce the number of forecasts "dot plot" rate hikes this year 4-2 months.

1. The Japanese authorities compete on the state of the economy

With regard weeks to go to the expected decision of the second round of increase in consumption tax, the Japanese government continues to discuss how the current internal conditions to justify the postponement of the increase.

Last week, Prime Minister Abe said his government would increase the tax rate "unless there is a Lehman-type event." During the night, speakers from the opposition suggests that the current consumption is at its "worst level since the Lehman crisis."

the rest of the market continues to focus on the strength of the yen ( pure and simple trade above its November 2014 summit ¥ 110.34) and wondering how aggressive BoJ should be?

the contract was eventually record short yen "and the last movement of the dollar has speculate some form of intervention by the government or the BOJ. technical analysts have eyed ¥ 110 as the breaking point.

However, according to "Yen", former Finance Minister Eisuke Sakakibara (was in charge of currency intervention), it remains optimistic about its own currency rally in light H2 at ¥ 105 as the global economic outlook is deteriorating. he said that "a rise to ¥ 105 only then may Japanese officials quick to verbally intervene to try to talk down while past earnings ¥ 100 could see physical intervention to weaken. "

2. the global yields fall flight dominates quality

the increasing demand for haven assets yesterday again pushed down the public debt yields.

German Bund fell to its lowest level of performance in a year, negotiating interest above zero (+ 0.09%). U.S. 10 have reached their lower back in two months + 1.72% while gold U.K. 10-year benchmark gave + 1.34%.

German factory orders Downbeat coupled with Brexit referendum concerns U.K. has investors seeking refuge in the dollar "big" and similar stateside assets. Other refuge instruments, especially gold ($ 1,226) and JPY (¥ 110.34), also found favor with investors who are trying to preserve capital.

The yields on government bonds have naturally fallen sharply this year as investors continue to struggle with a world of low growth, low inflation, declining productivity and a high level of debt worldwide. The ECB and the BoJ have already generated a growing number of government bonds returned negative, intensified the fight for investors to get income (JGBs continue to trade below zero). Even cautious Fed towards normalization of rates reduced the risk of yield US bonds aggressively backing up any time soon.

3. inversion rules stun Wall Street

The US Treasury has adopted tough new rules to curb reversal in Q4 offers - an American company 'reincorporated abroad following the purchase of a foreign company in an attempt to benefit from lower overseas tax rates.

This week, the U.S. Treasury published another series of regulations to "tax inversions" seeking to prevent foreign companies to acquire more U.S. companies over a short period of time. The new rules state that there will be now a three-year limit on foreign companies acquiring assets U.S avoid property requirements for a reversal later case.

The announcement of

Yesterday managed to derail the largest acquisition ever of health care in the world - US pharmaceutical giant Pfizer $ 0b agreement to acquire 59% of the Irish company Allergan an inversion case. The transaction would have enabled the company based in New York a foreign address and a lower tax rate.

The breaking of the agreement will cost Pfizer a cool $ 400m + supposed!

4. Shares slide on surprise suspend oil stocks

A rebound in world crude oil prices overnight ( $ 37.03 WTI, Brent $ 38.79) helps slow the slide of global action month. Energy markets remain cautious after stocks API yesterday showed the first draw down (-4.3m vs. + 2.6m forward) in nearly two months. Also helping oil prices is the president of Ecuador, indicating that the Latin American oil producers will meet on April 8 to discuss a freeze on oil production.

To date, the crude bulls have focused most of their attention on the production meeting April 17 Doha. Kuwait continues to express confidence that global producers may agree to limit oil production, despite the tensions between Iran and Saudi Arabia.

The data on US oil inventories will be closely monitored this morning -. The EIA official data is due at 10:30 EDT

5. Federal Open Market Committee (FOMC) minutes

The release minutes of the FOMC March at 14:00 EDT today could renew pressure on the "strong" dollar. The market hopes to have a better idea about the U.S. rate normalization schedule - investors last week were sideswiped by Yellen openly "pacifist" comments from Fed Chairman.

Wait fixed income dealers seeking comments from Fed President Esther George of Kansas City - she was the only dissenter on the vote to keep interest rates unchanged

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