EUR 8.70 For Business Accounts Only

The Morning Track as-usual

- The Morning Track – As Usual by Bob Savage
http://trackresearch.com/articles/the-morning-track-as-usual/

We get US CPI this morning and given the February reaction, many are wary, but as usual, nothing really matters so far today. The drop in volatility across markets, the inability of 10Y US rates to breach 3% and the on-going evidence of solid global growth – all drive the usual “Goldilocks lives” trading view. Politics are noise –1) Witness Japan: Japanese Finance Minister Taro Aso said that he will cooperate with an ongoing investigation into altered documents related to Moritomo Gakuen, and repeated his apology for the incident. He has decided to skip the G20 FinMin meetings because of the pressure. 2) Consider UK: UK May has given Putin until midnight to disprove he is behind the Russian double-agent murder attempt or what? UK doesn’t play in the Russia World Cup or sees its spies expelled or some of the assets from Russia in the UK are frozen. None of that seems scary enough given the Ukraine experience. Policy continues to matter – ECB Lane comments dro
ve the EUR to highs this morning - but even that didn't last. He repeats a consistent line – its not the level of EUR/USD that matters but the speed of change. Central Bankers are all volatility traders it seems. Of course, the focus today is on the FOMC reaction to CPI – and that will have to wait for next week – as the black out period for Fed speakers is upon us leaving markets to play business as usual unless the numbers shock. This puts us all back to constrasting now to what mattered in February – a strong jobs report with higher wages, followed by a higher CPI. The difference for March being that wage data was benign. The key driver for today will be how rate markets react as that is the pain trade – all else looks like noise – boundaries are 2.84% or 2.96% with either possible but both unexpected as short-term traders see real volatility returning as unusual.