• Ten indicators to take the pulse of the market in the crisis

    read:2023/2/26 3:30:20

    Among these 10 forex trading accountsdicators, there are 5 major benchmark interest rates such as LIBOR, as a sensitive observer of the depth forextradingaccountsregister breadth of the financial crforextradingaccountstypeis; there are national sovereign CDS such as US Treasury CDS, to observe the direction of capital flow between countries; there is RMB NDF, to observe the flow of international capital inside and outside the Chinese market; VIX cashback forex, to make an observation of the US stock market In addition, I also selected the U.S. dollar index and the continuous price of gold as the two major global risk aversion observation indicators We can see that from August 12, 2008, the five major benchmark interest rates rose steeply, kicking off the prelude to the worsening of the financial crisis; October 7 to 8, after 11 global central banks joined hands to cut interest rates, LIBOR and NYFR paradoxically went up from October 15 onwards, the indicators Soothing, the five major global benchmark interest rates inflection point appeared, the financial crisis into the second half, the global real economy into recession, further support the trend of the dollar index, the return of the dollar Since the financial crisis, the OIS trend has been basically normal, which indicates that the central bank system has not been destroyed due to the corporate balance sheet recovery effect, the second shock wave of the financial crisis the first signs have begun to appear in January 15, 2009, several major The benchmark interest rates have shown signs of lifting, but the central banks of major countries have been actively intervening, with no risk The dollar index has always been the vane of global capital flows The credit of the dollar is guaranteed by the strong economic, military and political combined strength of the U.S. The more the crisis period, the more attractive the dollar is relative to other currencies In addition, in the midst of the chaos, the growth rate of labor productivity in the U.S. is still higher than almost all other developed countries, which For the dollar currency value to provide support, the financial crisis, the dollar back to the United States is another important driver of dollar appreciation from July 15, 2008 onwards the dollar index has risen 20% gold prices from the low point in October 2008 has risen 38%, gold as a means of payment of last resort, in the crisis will be highly favored by investors but in the crisis eased, the gold price will fall back The The financial crisis originated in the U.S., but it still has a significant impact on China. From the beginning of November 2008 to the present, the CDS of U.S. Treasuries rose 165% and the CDS of Chinese Treasuries rose 67%. The relevant management still has to guard against the formation of RMB devaluation expectations From April 2008 onwards, the RMB has shown weakness from the trend of RMB NDF, which is consistent with the outflow of lending capital in the fourth quarter of 2008 It should be reminded that the national sovereign CDS of the three emerging market countries, Lithuania, Latvia and Kazakhstan, broke 800 on the upside and are technically bankrupt, and the Russian national sovereign The CDS is close to 765, which is also close to the edge of bankruptcy. Therefore, we expect the international community to further strengthen policy coordination and work together to help the readers to fully understand the 10 major indicators, I will explain each of them as follows London Interbank Offered Rate (LIBOR) is undoubtedly one of the most important financial indicators in the world, which refers to the short-term lending rate between first-class banks in London. It is the prime rate for most floating interest rates in the international financial markets. According to the British Bankers Association (BBA), the total value of financial products directly based on LIBOR is currently as high as $150 trillion. In addition, LIBOR is usually an average rate quoted by a few designated reference banks at a specified time (usually 11:00 a.m. London time), so the formation of LIBOR relies on the active quotation of large banks, rather than being based entirely on real transactions, which poses a moral hazard problem due to the huge impact of the financial crisis As a result, the accuracy of LIBOR quotes was widely questioned by the market after the subprime crisis, and the BBA was trying to reduce distortions by eliminating extreme values, but in a market in distress, perjury may not be an isolated phenomenon. The Wall Street Journal used information from the default insurance market to try to prove that LIBOR was not up to the task New York Funding Rate In response, in June 2008, ICAP, the worlds largest money brokerage firm, introduced a new method of calculating benchmark interest rates, named the New York Funding Rate (NYFR) according to ICAPs plan, there will be 40 banks to provide quotes, the term covers 1 month and 3 months, while ICAP also plans to make the offer bank anonymous, in order to make the offer more realistic NYFR will be announced daily at 9:30 a.m. New York time, while LIBOR is announced daily at 11:00 a.m. London time, when the U.S. market has not yet opened the rate is not intended to replace the current widely used Overnight Index Swaps (OIS) are over-the-counter (OTC) derivatives in which a market participant agrees to pay a fixed rate in exchange for a swap deposit. It is a measure of the markets expectation of the central bank interest rate For USD swaps, the floating rate is the actual daily federal funds rate Currently, the minimum bid line established by the Federal Reserve for short-term tenders (TAFs) uses a 1-month overnight index swap Under normal market conditions, OIS tends to be lower than LIBOR  LIBOR-OIS spread Closely related to the OIS indicator is the LIBOR-OIS spread which primarily reflects credit stress in the global banking system (excluding central bank credit), with a widening spread seen as a decline in the willingness of interbank lending In fact, this interest rate spread is the core indicator used by most economists and analysts to measure the tightness in credit markets The USD LIBOR-OIS spread has increased from $7.5 billion in October 2008 to $7.5 billion in October 2008. OIS spread narrowed sharply from a high of 366 basis points in October 2008 to about 90 basis points in January 2009, but with current market concerns about banking financing and a further decline in confidence in the banking sector, the spread widened again to more than 100 basis points Prior to the current crisis, the spread was typically below 10 basis points Fortunately, the LIBOR-OIS spread It should be noted that the LIBOR-OIS spread, best viewed in conjunction with the TED spread, is the difference between the three-month Eurodollar rate (often represented by the 3-month LIBOR rate) and the 3-month U.S. Treasury rate, which has the advantage of short maturity and almost zero risk. Therefore, it is the best hedging tool for short-term funds; relatively speaking, the European dollar price is more elastic, investors can buy European dollars and sell short-term Treasury bonds to arbitrage TED spreads are the canary and the bird (002154 quotes, love shares) in the global financial market, we can observe the market credit conditions from its movements when TED spreads soar, that is, the banking system risk expansion, tightening market funding, and the cost of interbank lending. Interbank borrowing costs increase, and also raise the cost of corporate borrowing, representing a tightening of the credit conditions of the banking system (excluding the U.S. federal government credit) For the time being, the TED spread is still in a normal state, and on the night of February 24 was even downward National sovereign CDS The above five benchmark interest rate indicators can well observe the changes in commercial credit, but does not well reflect the changes in the credit of different countries on the flow of funds Therefore, there is a need to observe sovereign credit CDS, i.e. sovereign credit default swap contracts Generally speaking, when a CDS seller sells a CDS, it is a guarantee for the future performance of a corresponding claim From the trend of sovereign CDS, you can observe the markets assessment of the financial and fiscal situation of each country For example, if the CDS of Chinese government bonds declines, the market believes that the risk of default on Chinese government bonds gradually declines, which also For example, if the CDS of Chinese government bonds declines, the market perceives that the risk of default on Chinese government bonds is gradually declining, which means that the credit quality of Chinese sovereign debt is further rising. According to the Emerging Markets Traders Association in early 2003, the turnover of NDFs in six currencies - Korean Won, New Taiwan Dollar, Chinese Yuan, Indian Rupee, Indonesian Rupee and Philippine Peso - accounted for about 70% of the global emerging market NDF turnover. USDollarIndex&Reg, USDX), is calculated with reference to the weighted average of the changes in the exchange rate of the U.S. dollar against six currencies in March 1973, and uses 100 points as a benchmark to measure its value The USD index reflects the degree of change in the exchange rate of the U.S. dollar against a basket of currencies If the USD index falls, it means that the U.S. dollar has depreciated against other major currencies Gold continuous price  With the spread of the global financial crisis and the strengthening of governments bailouts, especially the expansion of guarantees for the financial sector, the risk of national sovereign defaults is also increasing, and the price of national credit default swaps (CDS) is currently at a high level When all currency risks are rising, gold becomes the last choice of hedging for the monetary system, so the continuous price of gold can reflect the markets hedging sentiment On the other hand, in the long run The government is currently leading the economy out of trouble by printing large amounts of money, leading to increased risk of future currency devaluation, and golds value preservation advantage is reflected According to our gold pricing model earlier forecast, gold has not made a new high, and is unlikely to make a new high VIX index VIX index (CBOTVolatilityIndex), or volatility index, is compiled by the CBOT, to S& If the implied volatility is high, the higher the VIX index, which reflects how much investors are willing to pay to hedge their investment risks. Therefore, the VIX is widely used to reflect the degree of investor panic about the future market, also known as the panic index, the higher the index, it means that investors feel uneasy about the stock market situation; the lower the index, it means that the stock index movement will On the evening of February 24, the VIX of U.S. stocks has returned to below 50 on a comprehensive consideration, the U.S. SP500 belongs to the second bottoming