Latest news with #RSMUS
CNBC
3 days ago
- Business
- CNBC
'Bond vigilantes' are taking aim at Japan market ahead of critical election
The bond vigilantes are sharpening their knives, and this time the target of the fixed income crusaders could be Japan. With a crucial election looming just days away that is set to determine the course of the fiscally troubled nation, a market storm is brewing. As rates hover around record levels for Japanese government bonds, the potential for not only turbulence in yields there but across the globe is gaining investors' attention. Bond yields move inversely to their prices. "We've got an election coming up in Japan where it looks like the upper house may be taken over by those who intend to increase federal spending," said Joseph Brusuelas, chief economist for tax consultancy RSM US. "It's an interesting confluence of events that will impact yields across the international economy." Indeed, Japan is serving as a bit of a global microcosm while it battles issues that are both common to developed nations and unique to a country struggling with pesky inflation, a rising debt load and an unsettled political climate. JP10Y 1Y mountain Japan 10-year bond yield over the past year The situation is even raising the possibility that "bond vigilantes" are on the horizon. The term refers to fixed income buyers who suddenly go on strike when they decide that the reward for a country's sovereign debt isn't worth the risk it requires. That such a dilemma could come to Japan was once unthinkable, as the central bank holds more than half the government's debt and yield-curve control was a staple of monetary policy. However, changing dynamics, including the aforementioned inflation and debt problems along with the uncertainty associated with President Donald Trump's tariffs , have altered the investing landscape substantially. Veteran investor Ed Yardeni coined the term "bond vigilantes" in the 1980s and sees the specter of similar fixed income trouble on the horizon. In a Yardeni Research note this week, the firm cited as one of several factors spelling trouble for the Japanese bond market "the high odds that the next Japanese government turns to tax cuts and increased spending in ways that trigger the Bond Vigilantes. This pivot could have a typically calm debt market sending turbulence around the globe." All market eyes will be on Sunday's election, which will serve as a referendum on Prime Minister Shigeru Ishiba and his coalition government. Japanese long bond yields at the 30- and 40-year maturities have risen nearly one percentage point apiece over the past year, so further turmoil could start to spread if conditions remain unstable. "It's a preview of coming attractions as the U.S. has to address competing demands for scarce federal dollars which typically result in increased government spending, higher interest rates, higher yields and higher inflation," said Brusuelas, the RSM economist. "This really is at the heart of the issues across advanced economies."
Axios
3 days ago
- Business
- Axios
How stocks could tumble if Fed chair Powell is fired
Stock investors started selling at 11:15am ET Wednesday when Bloomberg reported that President Trump was likely to fire Fed chair Jerome Powell soon. Why it matters: The nearly 1% decline is a mild premonition for equity investors of what's to come if the Fed chair is really ousted. What they're saying: "It will be several orders of magnitude worse, should the White House ever truly move to fire Powell," Joe Brusuelas, chief economist at RSM US, tells Axios. Firing the central bank chief sets the stage "for further diversification away from dollar denominated assets," Brusuelas later added in a note. Between the lines: Stocks are dollar-denominated assets. While stocks recovered their losses Wednesday, the dollar did not. This could be an indication that investors are temporarily OK with the risk/reward profile of equities, but they're gradually moving away from the dollar. Over time, that alone could be a drag on equities. What we're watching: The market's swift rebound mirrors a vibe that crosses conversations with sources: Wall Street sentiment surrounding a potential Powell ousting appears to be shifting.
Yahoo
04-07-2025
- Business
- Yahoo
As US stocks hit records, experts see the dollar falling further
While the US stock market has fully recovered from a spring rout, the relentless drop in the dollar is prompting currency experts to warn of greater financial market turmoil ahead. The American currency is down more than 10 percent so far in 2025, a historic retreat that has overlapped with occasional spikes in long-term US Treasury yields. The anomalous dynamic suggests investors are rethinking US holdings, once considered safe havens, as they take stock of President Donald Trump's unpredictable policy shifts. While the dollar's status as the global reserve currency appears unshakeable in the near future, many currency experts expect the greenback to continue to weaken in the coming years, given expectations for slower growth after a long run of US out-performance. "It's US exceptionalism basically falling by the wayside and the rest of the world playing catch-up," said Erik Nelson, a macro strategist at Wells Fargo, who predicts the dollar will continue to depreciate. In April, global markets were shaken by "Sell America" gyrations in the stock, foreign exchange and US treasury markets, and analysts expect similar sentiment in the future. "I think the world is becoming a little bit less stable politically, which is generally kind of problematic for economic and financial market volatility," Nelson said. "We are witnessing the end of a 14-year bull run of the US dollar," said Joseph Brusuelas, chief economist at RSM US, a consultancy, who expects a "multi-year unwinding of the dollar." Harvard Economist Kenneth Rogoff, author of the 2025 book "Our Dollar Your Problem," said central banks in China and elsewhere were diversifying away from dollars even before 2025, but that Trump accelerated the trend. "I think we'll see a period of a lot of financial volatility, largely centered around the chaos in the United States," Rogoff told AFP, pointing to factors that include uncertainty about US central bank independence and the rise of populism. "We'll probably have a more volatile period in financial markets over the next 10 years than we have in the preceding." - Onshoring benefit - Both Nelson and Rogoff pointed out that the dollar at the start of 2025 was unusually lofty after surging in the weeks following Trump's November 2024 victory. Economists have since rethought assumptions that the US would continue to outperform rival economies. According to the ICE US Dollar Index, a basket of seven currencies, the dollar fell 10.7 percent through the end of June, the biggest drop in the first six months of a year since 1973. On Thursday, the dollar index rose modestly after solid US jobs data dimmed odds for imminent Federal Reserve interest rate cuts. With a gain of more than 13 percent against the dollar, the euro has been among the biggest winners following Germany's big fiscal investments in defense, even as the European Central Bank continued to cut interest rates. Besides a weaker US economic outlook, the shift in the dollar reflects expectations for looser US monetary policy. Trump has taken relentless aim at Jerome Powell, referring to the Federal Reserve Chair as "a stupid person" while calling for interset rates "at least two to three points lower" -- a huge shift in monetary policy. While Treasury Secretary Scott Bessent and other top officials have rejected suggestions they prefer a cheap dollar, a less expensive currency is beneficial to US exporters and consistent with the administration's stated goal of beefing up manufacturing. "Lower interest rates and a weaker dollar would enable the US to strengthen its economic self-sufficiency and increase onshoring," said Jason Schenker of Prestige Economics, who argues that the moves align with a muscular national security posture towards China. Market watchers have come to expect Trump to modulate his actions in response to big negative market swings. On April 9, Trump backtracked on many of the most onerous tariffs from his "Liberation Day" announcement a week earlier after a spike in Treasury bond yields hammered stocks. Later that month, he said he has "no intention" of firing Powell after earlier comments set markets ablaze. But equity markets so far appear unfazed by dollar weakness, with both the S&P 500 and Nasdaq ending Thursday's session at records. "At some point it's going to get investors' attention," Cresset Capital Management's Jack Ablin said of the weak dollar. "It signals foreign investors are less inclined to own US assets." jmb/jgc Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
New Straits Times
04-07-2025
- Business
- New Straits Times
As US stocks hit records, experts see the dollar falling further
NEW YORK: While the US stock market has fully recovered from a spring rout, the relentless drop in the dollar is prompting currency experts to warn of greater financial market turmoil ahead. The American currency is down more than 10 per cent so far in 2025, a historic retreat that has overlapped with occasional spikes in long-term US Treasury yields. The anomalous dynamic suggests investors are rethinking US holdings, once considered safe havens, as they take stock of President Donald Trump's unpredictable policy shifts. While the dollar's status as the global reserve currency appears unshakeable in the near future, many currency experts expect the greenback to continue to weaken in the coming years, given expectations for slower growth after a long run of US out-performance. "It's US exceptionalism basically falling by the wayside and the rest of the world playing catch-up," said Erik Nelson, a macro strategist at Wells Fargo, who predicts the dollar will continue to depreciate. In April, global markets were shaken by "Sell America" gyrations in the stock, foreign exchange and US Treasury markets, and analysts expect similar sentiment in the future. "I think the world is becoming a little bit less stable politically, which is generally kind of problematic for economic and financial market volatility," Nelson said. "We are witnessing the end of a 14-year bull run of the US dollar," said Joseph Brusuelas, chief economist at RSM US, a consultancy, who expects a "multi-year unwinding of the dollar." Harvard economist Kenneth Rogoff, author of the 2025 book Our Dollar Your Problem, said central banks in China and elsewhere were diversifying away from dollars even before 2025, but that Trump accelerated the trend. "I think we'll see a period of a lot of financial volatility, largely centred around the chaos in the United States," Rogoff told AFP, pointing to factors that include uncertainty about US central bank independence and the rise of populism. "We'll probably have a more volatile period in financial markets over the next 10 years than we have in the preceding." Both Nelson and Rogoff pointed out that the dollar at the start of 2025 was unusually lofty after surging in the weeks following Trump's November 2024 victory. Economists have since rethought assumptions that the US would continue to outperform rival economies. According to the ICE US Dollar Index, a basket of seven currencies, the dollar fell 10.7 per cent through the end of June, the biggest drop in the first six months of a year since 1973. On Thursday, the dollar index rose modestly after solid US jobs data dimmed odds for imminent Federal Reserve interest rate cuts. With a gain of more than 13 per cent against the dollar, the euro has been among the biggest winners following Germany's big fiscal investments in defence, even as the European Central Bank continued to cut interest rates. Besides a weaker US economic outlook, the shift in the dollar reflects expectations for looser US monetary policy. Trump has taken relentless aim at Jerome Powell, referring to the Federal Reserve Chair as "a stupid person" while calling for interest rates "at least two to three points lower" — a huge shift in monetary policy. While Treasury Secretary Scott Bessent and other top officials have rejected suggestions they prefer a cheap dollar, a less expensive currency is beneficial to US exporters and consistent with the administration's stated goal of beefing up manufacturing. "Lower interest rates and a weaker dollar would enable the US to strengthen its economic self-sufficiency and increase onshoring," said Jason Schenker of Prestige Economics, who argues that the moves align with a muscular national security posture towards China. Market watchers have come to expect Trump to modulate his actions in response to big negative market swings. On April 9, Trump backtracked on many of the most onerous tariffs from his "Liberation Day" announcement a week earlier after a spike in Treasury bond yields hammered stocks. Later that month, he said he has "no intention" of firing Powell after earlier comments set markets ablaze. But equity markets so far appear unfazed by dollar weakness, with both the S&P 500 and Nasdaq ending Thursday's session at records. "At some point it's going to get investors' attention," Cresset Capital Management's Jack Ablin said of the weak dollar. "It signals foreign investors are less inclined to own US assets."
Int'l Business Times
04-07-2025
- Business
- Int'l Business Times
As US Stocks Hit Records, Experts See The Dollar Falling Further
While the US stock market has fully recovered from a spring rout, the relentless drop in the dollar is prompting currency experts to warn of greater financial market turmoil ahead. The American currency is down more than 10 percent so far in 2025, a historic retreat that has overlapped with occasional spikes in long-term US Treasury yields. The anomalous dynamic suggests investors are rethinking US holdings, once considered safe havens, as they take stock of President Donald Trump's unpredictable policy shifts. While the dollar's status as the global reserve currency appears unshakeable in the near future, many currency experts expect the greenback to continue to weaken in the coming years, given expectations for slower growth after a long run of US out-performance. "It's US exceptionalism basically falling by the wayside and the rest of the world playing catch-up," said Erik Nelson, a macro strategist at Wells Fargo, who predicts the dollar will continue to depreciate. In April, global markets were shaken by "Sell America" gyrations in the stock, foreign exchange and US treasury markets, and analysts expect similar sentiment in the future. "I think the world is becoming a little bit less stable politically, which is generally kind of problematic for economic and financial market volatility," Nelson said. "We are witnessing the end of a 14-year bull run of the US dollar," said Joseph Brusuelas, chief economist at RSM US, a consultancy, who expects a "multi-year unwinding of the dollar." Harvard Economist Kenneth Rogoff, author of the 2025 book "Our Dollar Your Problem," said central banks in China and elsewhere were diversifying away from dollars even before 2025, but that Trump accelerated the trend. "I think we'll see a period of a lot of financial volatility, largely centered around the chaos in the United States," Rogoff told AFP, pointing to factors that include uncertainty about US central bank independence and the rise of populism. "We'll probably have a more volatile period in financial markets over the next 10 years than we have in the preceding." Both Nelson and Rogoff pointed out that the dollar at the start of 2025 was unusually lofty after surging in the weeks following Trump's November 2024 victory. Economists have since rethought assumptions that the US would continue to outperform rival economies. According to the ICE US Dollar Index, a basket of seven currencies, the dollar fell 10.7 percent through the end of June, the biggest drop in the first six months of a year since 1973. On Thursday, the dollar index rose modestly after solid US jobs data dimmed odds for imminent Federal Reserve interest rate cuts. With a gain of more than 13 percent against the dollar, the euro has been among the biggest winners following Germany's big fiscal investments in defense, even as the European Central Bank continued to cut interest rates. Besides a weaker US economic outlook, the shift in the dollar reflects expectations for looser US monetary policy. Trump has taken relentless aim at Jerome Powell, referring to the Federal Reserve Chair as "a stupid person" while calling for interset rates "at least two to three points lower" -- a huge shift in monetary policy. While Treasury Secretary Scott Bessent and other top officials have rejected suggestions they prefer a cheap dollar, a less expensive currency is beneficial to US exporters and consistent with the administration's stated goal of beefing up manufacturing. "Lower interest rates and a weaker dollar would enable the US to strengthen its economic self-sufficiency and increase onshoring," said Jason Schenker of Prestige Economics, who argues that the moves align with a muscular national security posture towards China. Market watchers have come to expect Trump to modulate his actions in response to big negative market swings. On April 9, Trump backtracked on many of the most onerous tariffs from his "Liberation Day" announcement a week earlier after a spike in Treasury bond yields hammered stocks. Later that month, he said he has "no intention" of firing Powell after earlier comments set markets ablaze. But equity markets so far appear unfazed by dollar weakness, with both the S&P 500 and Nasdaq ending Thursday's session at records. "At some point it's going to get investors' attention," Cresset Capital Management's Jack Ablin said of the weak dollar. "It signals foreign investors are less inclined to own US assets."
