Another start to a new year another bout of anxiety over China, although I concede that the collateral damage on other markets have so far been far modest compared with the panic in Q1 last year. The bogey man is the same as in 2016. Capital outflows are accelerating, currency volatility has surged and the once bulging FX reserve coffers are leaking fast. These are ominous signs in a traditional emerging market macro-style framework, but I am not sure that this is the correct prism through which to look at China.
Read MoreWe have barely recovered from the hangover acquired on New Year's Eve, and I am already tired of the memes and narratives being used to label 2017. I like to believe that I have a decent bullshit-filter, but I have realised that it needs a serious upgrade in the wake of recent geopolitical festivities. Call it the January blues, but the idea of re-engaging with the Trump/Brexit crap-shooters doesn’t exactly fill me with joy. The upshot, I suppose, is that it forces me to keep the eye on the ball. In that vein, the tradition of financial market analysis at the dawn of a new year suggests that I present a list of list of 2017 (non)predictions and themes. But I won’t. This already has been done ad nauseum by other prominent members of the peanut gallery. Instead, I want to pick up where I left before I dialled down for the Christmas break.
Read MoreI want to wish all my readers a Merry Christmas and a Happy New year. I am averaging one market related post a week since I moved to this new site, and I hope to keep that up in 2017.
The original entry contained a little Christmas story, but I reckon that I should keep my fiction and market commentary a little more separate than just putting it all up here above the fold. To make amends, I have created a new blog here where I will put up my non-market related content in the future. If you only come here for the occasional musing on the market, rest assured that this is what you'll get, and only that. I might still nudge you across from here once in a while, but I won't inundate you RSS readers with long tales of fiction. the original story which was posted here has been moved to the new blog. Josh is in a spot of bother. He is hungover, he has a lot of work to do, and someone just handed him an encrypted message.
Read MoreI wonder how many fixed income strategists had the famous exchange between Goldfinger and Mr. Bond in mind when they penned their missives this week. The Fed came and went, erring on the side of hawkishness, and bond holders once again found themselves at the front of the queue for the proctologist. U.S. yields surged across all maturities, adding fuel to the story of a regime change and genuine reflation story under the leadership of Mr. Trump. Trying to pin the U.S. bond market down in a few charts is not easy. Last week, I noted that my valuation scores suggests this is a good time to add exposure, but also that stock-to-bond returns, while high, weren't yet extreme. That situation has not changed even with last week's rise in yields. It is the same if we look at flows.
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