Advertisements
10Y BOJ bonds dollar Dow ECB euro eurostoxx FX gold oil pound yen yuan

Davos Man.

Well, that didn't disappoint.

Needless to say, this has the potential to be an interesting week, so you better buckle up.

That’s what we said on Sunday evening in our week ahead and preview and by God, this week didn’t disappoint.

The government shutdown was “resolved” if your definition of “resolved” involves making a bad situation immeasurably worse by kicking the can closer to the debt limit and raising the already high stakes.

If all you care about is stocks, there’s good news. The S&P was up for a fourth consecutive week and the 9th week in 10:

SPX

It’s been in overbought territory for 17 straight sessions:

SPX2

The curve flattened for a second consecutive day and if you want a little perspective, here’s the month with the BoJ trimming JGB purchases news and the BBG China headline marked for reference:

10Y

Trump went to Davos, posse in tow, and between them, they managed to start a global currency war during a week that featured a very sensitive BoJ meeting and an equally precarious ECB pow wow. The very last thing Kuroda and Draghi needed was for the U.S. Treasury Secretary to jawbone the already slumping dollar lower the second he touched down in Davos, but that’s what he did and the fallout was something to behold.

The dollar has now suffered its worst streak of weekly declines since 2010, with DXY down for a sixth week and BBDXY for a seventh.

DXY

Here’s an annotated chart that shows you how frantic things got from Wednesday through Friday:

DXY2

And here’s EURUSD:

EURUSD

As for USDJPY, well that was even more interesting. It started with the BoJ tweaking their inflation language. Hours later, Kuroda attempted to jawbone the yen back weaker, only to ultimately fail. Then came Mnuchin on Wednesday. Then came Trump on Thursday. Finally, on Friday, Kuroda made the “mistake” of sounding upbeat on inflation while speaking in Davos which catalyzed more unwanted yen strength and so, just hours later, the BoJ had to walk that back, by “clarifying” that Kuroda’s comments didn’t mean the bank is ready to revise its inflation outlook. And yes, all of that is just as absurd as it sounds and it underscores the extent to which everyone is on pins and needles. Here’s the annotated chart:

USDJPY

Meanwhile, the pound had its best week against the dollar in four months and is sitting at a fresh post-Brexit high:

GBPUSD

The onshore yuan had its best week in five months and has now strengthened for seven straight weeks:

USDCNY

Emerging market equities are on an insane run, MSCI’s index rose for an 11th day on Friday, but one thing worth noting is that the Cboe EM ETF volatility index rose for four straight days before pulling back to end the week:

EEM

Helping EM stocks is oil, which is of course at a three-year high:

WTI

Gold’s near a 17-month high, but you already know that, so let’s zoom in on the last two days so you can see how it’s traded with USDJPY on the headline hockey:

Gold

Finally, because we’re reasonably sure everyone has tuned out at this point, have a look at how mainland and Hong Kong Shares fared this week:

China

Oh, and if you’re wondering whether Trump is coming back from Davos a changed man, the answer is definitely “no”…

Advertisements

3 comments on “Davos Man.

  1. and he is still pissing and moaning with the words DACA out of his disgusting tiny fingers today?!? Psycho.

  2. Buckle-up is right because ANYTHING can happen from here. Melt-up, melt-down, war, currency war continues, currency war stops, bonds continue to blow-up, Melania walks, Trump flips out and is taken out of the White House in a straight jacket ooooooorrrrr the markets finally correct. yep, anything.

  3. Speech was just a repeat of previous comments. No value to Davos, just turmoil created by his presence,

Speak On It

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Skip to toolbar