Dollar eases, shipping struggles, and hedge fund hiccups
This week's chart pack covers the following topics:
US dollar weakens against Asian currencies as Fed begins rate cuts
Macrobond users can click here to access the chart and gain deeper insights into the data.
What the chart shows
This chart displays the year-to-date (YTD) performance of the US dollar (USD) against a range of global currencies. It ranks currencies from the largest YTD appreciation to the largest depreciation.
Behind the data
As the US labor market has been showing signs of softening and the Federal Reserve (Fed) has started its easing cycle with an oversized rate cut, the USD’s strength has begun to unwind. While the US Dollar Index (DXY ) has remained above 100, the dollar has depreciated significantly against several Asian currencies, including the Malaysian ringgit (MYR) and Thai baht (THB), with drops of 7-9%. Conversely, the USD has appreciated the most against Latin American currencies like the Mexican peso (MXN), as well as the Turkish lira (TRY). As the Fed continues its dovish policy , the USD may face further downward pressure.
US labor market weakens as majority of states face rising unemployment
Macrobond users can click here to access the chart and gain deeper insights into the data.
What the chart shows
This chart tracks unemployment trends from January 2019 to August 2024 for all 50 states in the US as a group. It highlights whether their unemployment rate has increased, decreased or remain unchanged compared to the previous month. According to the latest data recorded, 31 states experienced an increase in unemployment, five saw a decrease, and 14 had no change.
Behind the data
Conversely, unemployment rates have fallen in Arizona, Mississippi, Connecticut, Wisconsin, Iowa, Maine, Tennessee, Arkansas and Hawaii. Given that promoting maximum employment is one of the Fed’s dual mandates, continued labor market deterioration could prompt more aggressive interest rate cuts from the Federal Open Market Committee (FOMC).
Given that promoting maximum employment is one of the Fed’s dual mandates, continued labor market deterioration could prompt more aggressive interest rate cuts from the Federal Open Market Committee (FOMC).
Chinese 10-year bonds show low sensitivity to global macro factors
Macrobond users can click here to access the chart and gain deeper insights into the data.
What the chart shows
This chart illustrates the sensitivity of the 10-year Chinese government bond (10y CGB) to various global macro factors including GDP growth, inflation expectations, central bank policies, credit markets, and commodities, based on data from Quant Insight . Sensitivity coefficients show how many basis points (bp) the bond yield could change for each one standard deviation (s.d.) shift in a macro factor, with data spanning the past ten years.
Behind the data
Overall, the 10y CGB shows low sensitivity to global macro factors, with yield fluctuations typically within ±1 bp for a one s.d. shift. However, certain factors have had more pronounced impacts recently. For example, iron ore prices and expectations of quantitative tightening by the Bank of Japan (BoJ) have been linked to positive effects on the bond yield, while copper prices and European Central Bank (ECB) rate expectations have contributed to more negative consequences. These insights could be useful for positioning Chinese sovereign bonds.
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