EUR 8.14 For Business Accounts Only

The Morning Track almost-4

- The Morning Track - Almost by Bob Savage
http://trackresearch.com/articles/the-morning-track-almost-4/

Markets are in the “almost” phase – with US 10-year yields almost breaking 3%, with EUR/CHF almost over 1.20, with North Korea almost ready to find peace, with Mnuchin almost ready to visit China with a trade deal. Asia markets opened with reduced fears about geopolitics. So when you see almost turn to reality – pay attention – as is the case of JPY where 108 breaks. The rush of USD buying overnight matters as it has linked back to the US rate move Friday and brings back the correlation of growth and inflation to policy reactions. This is another way of saying if you aren’t worried about war, then worry about peace – geopolitics allow economics to return to headlines. Today brought the PMI flash reports for Japan and Europe – mostly stronger than feared – but not enough to convince anyone that the BOJ or ECB are going to act faster in 2018. The drop in Abe polls continues while in EU the budget revamp may add to schism with central Europe losing and pe
riphery winning. UK Brexit focus continues to hang over GBP with May’s cabinet pressuring on the customs union plan. All of which to say that while economics matter more than geopolitics today, local politics still drive and that is most clearly evident in the US with pictures from the funeral of former first lady Barbara Bush flooding headlines. We are in a quiet period of almost calm with risk on, USD up, bonds down, equities waiting for earnings and something else. So the almost risk-on rally doesn’t count even with JPY breakout out. Other safe-havens are unwinding too like gold, and maybe that is the best place to watch for larger hopes – as the 200 day at $1301.60 and the March lows at $1302.50 beckon.