EUR 9.38 For Business Accounts Only

The Morning Track backlash

- The Morning Track – Backlash by Bob Savage
http://track.com/articles/the-morning-track-backlash/

Self flagellation and trading the US unemployment report have a lot in common - Pain and volatility. Political backlashes are also in vogue today and that is interesting ahead of the Italian vote where the expectation is for a “no” vote and a risk for another shift to right. The UK May government lost a by-election and the soft-Brexit crowd is winning the public relations war making GBP look cheap and Gilts expensive. The French got another relief that their unpopular Socialist President Holland won’t seek re-election – leaving it more a Le Pen vs. Fillon battle rather than a 3-way fight. This was seen as good for the EUR as many see that helping the center-right over the far right. The US has jobs reports today and that dominates the agenda but likely won’t matter if the Trump PR machine makes its choices for Secretary of State or tweets about more policy shifts – with the 15% corporate tax rate promise yesterday’s news but today’s driver for further US
D/UST moves. The overnight news was light – like the Swiss GDP – which highlights that a too strong currency hurts while the UK construction PMI highlights that until Brexit really happens nothing changes. The Australian retail sales were stronger but commodities are lower and so nothing happened there and EU PPI was higher signaling that the recent oil jump and weaker EUR are likely to keep the ECB happy with its tapering but extending QE talk. All that is a backlash against buying equities today as inflation and rates has won the headlines – leaving it up to the US earnings and FOMC speakers to change the game or just make the chart of US rates more parabolic. Until we know that 2.50% is a top in 10Y, we won’t know if 102.05 US dollar index matters or JPY 115 or EUR 1.0550.