Comment of the Day
Video commentary for January 16th 2023
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: VIX pops on the upside even though the US market is closed, short-term oversold Dollar means rebounds are at risk of consolidation, China rebound continues.
Rupiah Rallies to Lead EM Currencies Higher on Slower Rate Bets
This article from Bloomberg may be of interest to subscribers. Here is a section:
The Indonesian rupiah is leading a rally in Asia’s emerging-market currencies as bets grow that the US will slow rate hikes, bolstering risk sentiment.
The rupiah gained as much as 1.3% against the dollar, the most in more than two months, while the baht climbed more than 1% to its highest level in about 10 months. Most Asian currencies are stronger.
Easing inflationary pressures in the US have raised expectations of a smaller rate hike in the upcoming meeting of the Federal Reserve, while optimism over China’s reopening has also brightened the outlook for some of the regional currencies.
Eoin Treacy's view - Last week’s lower CPI reading has led the wider investment community to conclude the peak of the interest hiking cycle is upon us. The Dollar took another leg lower on the news and supported everything from gold to crypto and non-US dollar denominated stock markets.
BOJ Opens 'Pandora's Box' for Traders on Alert for Another Shock
This article from Bloomberg may be of interest to subscribers. Here is a section:
Investors are on high alert for further policy tweaks from the Bank of Japan this week after December’s shock decision to raise the bar on yield movements failed to significantly improve market liquidity.
While almost all economists surveyed by Bloomberg expect no change at the two-day meeting finishing Wednesday as their main scenario, market pressure on the central bank’s stimulus framework has intensified since last month’s efforts to ease the side effects of policy.
Another increase in the ceiling for the 10-year yield is seen as the most likely course of action, should the BOJ act, given its recent emphasis on improving bond-market functioning.
Eoin Treacy's view - 10-year JGB yields are above the 50 basis point cap suggesting investors are willing to bet the BoJ will raise the rate at which they are willing to intervene.
Sunak Plans to Strengthen Anti-Protest Laws With Police Powers
This article from Bloomberg may be of interest to subscribers. Here is a section:
UK Prime Minister Rishi Sunak plans to strengthen anti-protest legislation, giving police additional powers to clamp down on demonstrations even before they’ve caused any disruption.
The government on Monday will propose an amendment to its own Public Order Bill — currently working its way through the House of Lords — to broaden the definition of what constitutes “serious disruption,” according to a statement from Sunak’s office.
“We cannot have protests conducted by a small minority disrupting the lives of the ordinary public: it’s not acceptable and we’re going to bring it to an end,” Sunak said in the statement. “The police asked us for more clarity to crack down on these guerrilla tactics, and we have listened.”
The legislation is aimed at strengthening the police’s ability to deal with protests such as those in recent years from environmental campaigners at Just Stop Oil and Extinction Rebellion, who have brought traffic and public transport to a standstill by blocking bridges, motorways and London’s subway network. But it’s provoked the ire of civil liberty groups and of the opposition Labour Party.
Labour’s policing spokeswoman, Sarah Jones, said in a statement that the police already have powers to deal with disruptive protests. She criticized Sunak for not focusing instead on tackling “the epidemic of violence against women and girls” or on prosecuting criminals.
The amendment will include allowing police to consider the total impact of a series of protests rather than treating them as a single incident; giving officers the right to step in even before a protest has resulted in disruption, and letting them deal with long-running campaigns designed to cause chaos repeatedly, according to the statement.
Eoin Treacy's view - Tightening the noose of civil liberties is almost always done in a reasonable manner. Who could argue with additional measures to ensure extremist activists don’t block major roads? Of course, we need additional measures to stop activists from defacing great works of art. However, once these kinds of measures are in place, they are often applied at the discretion of the authorities in new and surprising ways. With teachers ready to strike, the government appears to be putting measures in place to combat disruptions.