Tuesday, November 11, 2014

Friday’s moves reverse as market considers they went too far

     Friday’s moves reverse as market considers they went too far
    Fed funds rate expectations regain half of Friday’s losses, 10yr bond yields a bit more
    Dollar rises against almost every currency it fell against Friday, falls against the one currency it rose against (RUB)
    No obvious trigger for the reversal, just a sense the move was overdone
    Rise in stocks despite higher rates shows confidence in US recovery = USD-bullish
    I still expect repricing of rate expectations to support USD going forward

     Watch out for “polar vortex” headed to US
    We could be in for more unseasonably cold weather in US, like last winter
    Cold could damage crops, push oil prices higher

     Today:
    Japan:  Sep current account surplus unexpectedly rose, but USD/JPY moved up
    Eurozone, UK:  No major indicators
    Sweden:  Riksbank releases minutes of its Oct policy meeting, when it unexpectedly cut its repo rate to zero
    US: Government closed for Veteran’s Day. NFIB small business optimism expected to rise slightly.
    New Zealand:  RBNZ releases Financial Stability Report overnight

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