EUR 9.28 For Business Accounts Only

The Morning Track balanced-4

- The Morning Track – Balanced? by Bob Savage
http://track.com/articles/the-morning-track-balanced-4/

If you look at market prices you know its Friday – little has changed – and mood into the CPI/Retail Sales is that of skepticism that economics will matter more than politics. More fund to think that the FBI Comey event risk is larger or that North Korea will tempt a US response with an ICBM missile test over the weekend. The G7 is meeting and talking about Greece – hardly going to scare anyone, though the talk of a July or September return to bond markets might perk up some interest. The biggest news might be in the China/US preliminary trade deals detailing places where the US can sell more things to China – like natural gas or our credit rating services. The economic data overnight wasn’t so inspiring – GDP in German missed in 1Q but remains robust thanks to trade surplus. Eurozone IP missed but the growth back in Europe isn’t expected to stall even if the ECB moves from its dovish to neutral forward guidance in June with more tapering by September. The Ch
ina M2 missed while its CNY loans were larger – suggesting the tightening talk about China is more an accounting game but growth fears remain as the yield curve there inverts on the PBOC tightening. The vulnerability of positions on a Friday seems obvious and moods are mixed – some would be bold and say they are balanced – but deflation is at bay in many places while reflation seems more a pipe-dream in others – leaving the data today as an important measure but unlikely to scare anyone out of a Friday slumber. Perhaps when WSJ talks about High Yield bonds at historic tight spreads, low yields but notes defaults are well below average we should pay attention to tail risks – but that is a volatility question that no one wants to discuss. So we are stuck watching bond yields and wondering if the USD uptrend that restarted this week in earnest holds without rates breaking over 2.42% in 10Y.