Download Do Central Banks Need A Plumber? PDF

TitleDo Central Banks Need A Plumber?
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Page 32

ADM Investor Services International Limited is authorised and regulated by The Financial Conduct Authority. Member of The London Stock Exchange. Registered office: 4th Floor Millennium Bridge House, 2 Lambeth Hill, London EC4V 3TT. Registered in England No. 2547805 a subsidiary of Archer Daniels Midland

Company. Risk Warning: Investments in Equities, CFDs, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value, investors should therefore be aware that they may not realise the initial amount invested, and indeed may incur additional liabilities. These Investments may entail above average financial

risk of loss, and investors should therefore carefully consider whether their financial circumstances and investment experience permit them to invest and, if necessary, seek the advice of an independent Financial Advisor. Some services described are not available to certain customers due to regulatory constraints

either in the United Kingdom or elsewhere. © 2014 ADM Investor Services International Limited 2014.

Equity & Cross Asset Strategy
Paul Mylchreest Email: [email protected] Tel: +44 20 7716 8257



The basis swap has correlated closely with the Euro spot rate.





















Source: ADMISI, Bloomberg

It’s noticeable how sharply the Euro/US dollar swap declined during January to March 2015.
By mid-March 2015, the upward pressure on the dollar was such that we can’t help wondering whether
this was a factor in the Fed signalling a more dovish approach to tightening at the 18 March 2015 FOMC
meeting.

With the Yen/US dollar basis swap, there was a very sharp decline towards the end of 2014 - slightly

earlier than we saw in the Euro/US dollar.





















Source: ADMISI, Bloomberg

Page 63

ADM Investor Services International Limited is authorised and regulated by The Financial Conduct Authority. Member of The London Stock Exchange. Registered office: 4th Floor Millennium Bridge House, 2 Lambeth Hill, London EC4V 3TT. Registered in England No. 2547805 a subsidiary of Archer Daniels Midland

Company. Risk Warning: Investments in Equities, CFDs, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value, investors should therefore be aware that they may not realise the initial amount invested, and indeed may incur additional liabilities. These Investments may entail above average financial

risk of loss, and investors should therefore carefully consider whether their financial circumstances and investment experience permit them to invest and, if necessary, seek the advice of an independent Financial Advisor. Some services described are not available to certain customers due to regulatory constraints

either in the United Kingdom or elsewhere. © 2014 ADM Investor Services International Limited 2014.

Equity & Cross Asset Strategy
Paul Mylchreest Email: [email protected] Tel: +44 20 7716 8257



We would also highlight.

 Capital Goods – structural weakness in global capital investment cycle and risks to long-term in-

vestment horizons;

 Autos – rapid slowdown in China and unsustainable level of US production driven by cheap (sub-

prime) financing and inventory build.

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