Tag Archives: Fed - 11 posts found

USD Positioning Supports Weaker Dollar

In January and February we discussed our view that we thought the dollar would find it difficult to rally further and would instead display a modest weakening bias.  The initial leg up of the rally in 2014 was not due…


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Financial Conditions Keep Tightening

Financial conditions are slowly but surely tightening.  We have had one actual rate hike by the Fed, but conditions had begun to tighten before this. This is primarily a developed market phenomenon. Real M1 for the G7 has been trending…


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Inflation Alive and Well in the US

We have focused on the theme of the misplaced fear of deflation at Variant Perception frequently over the past 18 months.  At several points, markets and commentators seem to have become preoccupied with a belief that growth-destroying deflation was imminent….


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US Unemployment Rate is Not its Former Self

Structural factors are ensuring that the unemployment rate in the US today is not what it was in periods past.  Yellen has seemed to be more in the camp that the decline in the labour participation rate (PR) since the…


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US Inflation and Wages Continue to Turn Up

The key message from our leading indicators is that US inflation and wages continue to turn up. This was one of our core themes for 2014 we discussed in December last year and is bearing out. Core inflation and headline inflation are positive, while wages are turning up sharply. This has implications for profit margins. Wage increases inversely lead US corporate profits by two years. We have with very high likelihood seen the peak in profit margins, and we would expect them to fall.


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Slipping rate differential is bearish for CAD

In October we wrote a report highlighting the bubble in Canadian housing and told clients that the currency in particular was under threat. A large current account deficit and the creeping expectations that the BoC might actually be forced into lowering rates have been key factors for a weaker currency.


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Variant Perception on the US labour market and the future course of Fed policy

simon white

Variant Perception’s editor Simon White spoke to BNN this morning about the future course of Fed policy and the US labour market. Highlights included the likelihood that the Fed will stay looser for longer as well as how the market may have overestimated the actual pace of tapering.


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The Fed and QE – An almost impossible balancing act

A nice series of articles from Bloomberg news alerts us to the fact that the Fed is anything but united when it comes to QE. There is consequently ongoing confusion, disagreement and general apprehension surrounding whether and how the Fed is supposed to end QE . Quite simply; the powers that be do not see eye to eye on this one and this is slightly worrying (if completely understandable).


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Forward Guidance: “Stronger and Longer”

Yesterday’s FOMC saw the first tapering of bond purchases by the Fed, by $10 billion per month. To soothe markets, the Fed also reinforced its forward guidance, making it “stronger and longer”, by a promise to leave the Federal Funds rate close to the zero bound “well past the time that the unemployment rate declines below 6.5%”.


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EM could benefit if the Fed disappoints the tapering consensus

One of the points we have emphasized to clients in the past two months is that many of our indicators suggest that long rates in the US may not rise as aggressively as the consensus expects. In other words, the Fed might stay more dovish than the market expects and tapering, should it occur, is already priced in.


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