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The Morning Track background-noise

- The Morning Track – Background Noise by Bob Savage
http://track.com/articles/the-morning-track-background-noise/

There was little in the overnight session to change the debate about risk or current market trends. Focus on the dramatic drop in Puerto Rican Bonds after the Trump “wipe it away” comment highlights the unpredictability of risks for any one sector or asset class today. Another storm brewing in the Gulf of Mexico adds to the drama with oil reacting to the noise of potential hurricane Nate – lifting higher after a week of selling. The defiant speech from Catalan Puigdemont vowing to press ahead with a declaration of independence in spite of the Spanish King’s pleas didn’t matter as the IBEX and the bond markets rally back today. Of course, the odd press conference from US Secretary of State Tillerson denying reports he considered resigning adds to the background noise today. The economic data was modest with Australian weak retail sales and strong iron ore exports not sufficient to change much more than the tilt of Australian bonds and the AUD, with much of Asia
shut for holiday. For Europe, the focus is on the ECB minutes and the upcoming speeches from its board members as they try to square negative rates, aggressive QE and above trend growth to the markets. All of this is background noise to a market waiting for a bigger move in either the USD or the US bonds or both. The trends for reflation rest on the strong economic growth data from the US and globally along with a host of comments from central bankers nudging toward the exit of easy money. Whether anything changes today rests on the US news which will be polluted with the same noise about hurricane adjustments and doubts with politics the veneer that keeps uncertainty high. Until we see a break down in US 10-year yields at 2.28% the uptrend holds, and with it hopes for a stronger USD.