EUR 9.28 For Business Accounts Only

The Morning Track anxiety

- The Morning Track – Anxiety? by Bob Savage
http://track.com/articles/the-morning-track-anxiety/

Markets have had little sign of anxiety this month despite hair-raising horrors from the Manchester terror tragedy to the Trump FBI Comey firing to North Korea missile testings. But overnight, headlines did matter – risk is clearly off - and that nervous twitch showed up particularly in GBP as lower oil prices pushed down yields everywhere making reflation less sure and as the UK election polls narrowed again with Labour now 5% behind the UK May Conservatives. This is in sharp contrast to polls for French President Macron showing he seems likely to get an absolute majority in parliament. Egypt suffers another terror attack as gunman kill over 20 Christians on a bus. The G7 meeting starts with many in Europe nervous about Trump as unified terror response and migration policy may fail on clearly conflicting trade interests and FX. On the economic front - the Japanese CPI headlines were mixed and don’t really inspire anyone to think that the BOJ will be successful in its
2% target anytime soon. JPY gains followed with risk-off moods. The Italian data while usually not a big market mover remind us all of how confidence matters and could be the next vulnerability to trading markets as the hard data remains soft and the better soft data (ie consumer and business confidence) could fall hard – with all eyes on the US University of Michigan Consumer Sentiment today to reflect the new Trump reality of a less sure agenda thanks to FBI Russian investigations, a muddled tax reform push and CBO induced headwinds on repealing and replacing healthcare. Whether any of this matters and provokes more anxiety will be the focus today and likely for the next 2 weeks into the FOMC June decision. Data dependency remains part of policy as politicians seem unable to counter easy money dominance as the key lever.