EUR 8.84 For Business Accounts Only

The Morning Track asymmetry-2

- The Morning Track – Asymmetry by Bob Savage
http://track.com/articles/the-morning-track-asymmetry-2/

The asymmetry of markets is in play today. Yellen is given a chance to right the leaning of global financial conditions again back towards fear and away from greed. Trees don’t grow to the sky, nor do markets – they both move towards the hot money. The biggest stories from overnight were about flows and then economics with USD recovering from Asia as it grazed near new historic lows while EU bonds flipped back bid despite no real ECB talk. The AUD and NZD gained sharply – linked to the China trade which was the sole economic upside. The SEK is also a winner as its inflation beat expectations and puts the Riksbank back in play to join the ECB in talking about normalization. The failure of the EUR to break over 1.15 is beginning to get many excited in FX as that only further supports the easy financial conditions that Draghi noted in Sintra 2-weeks ago. We are all waiting to see if Yellen in her second day of testimony will do something similar – throwing a bone
to those bond bears that expected a larger run back to 2.55%. As the US rates remain less scary, the focus in the US will shift to the data and the 2Q earnings – making the US once again the pivot for moods globally. Watching 2.40% as the key level in 10Y to break to take any Yellen shift in tone to matter.