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Most see the low volume, low volatility world of markets as benign, not malignant, despite the scares from inverted yield curves, 4Q price action PTSD and ongoing geopolitical uncertainty from Brexit to US/China to elections from Australia to Israel to India and Spain. Anyone looking down from above would see oil at 5-month highs and China iron ore at record highs grinding against the easy money policy of central bankers moving from normalization to wait-and-see. The new fear for investors is in missing out, in the upside to growth forecasts, to realizing there is no alternative to risky assets in a world of negative real rates. The confusion over how to create inflation after years of disinflation in Japan and Europe and below target in the US leaves more extreme measures in the wings. Fiscal not monetary policy will remain the focus just about everywhere making economics political more than model driven. This doesn’t mean that there aren’t notable headlines moving
markets, only that it’s not about the data but politics, to wit:
• Saudi Aramco bond orders over $75bn – with price not expected to be tighter than the sovereign debt. The company will issue 6 bonds from 3Y to 30Y.
• Libya civil war continues with forces of General Haftar carrying out airstrikes on Tripoli.
• Trump proposes new tariffs of $11bn on EU imports to offset Airbus subsidies. This comes as the EU and China start summit talks in Brussels.
• Iran puts US central command on its terror list in a tit-for-tat move after the US labels the Iran Revolutionary Guard a terror organization.
This makes the dull trading seem unsustainable, with focus on Super Wednesday and perhaps a bit more from the US on politics and forecasts with the IMF expected to lower its global growth view from 3.5% this morning. The USD is offered and remains vulnerable to a risk-on return but for now, FX and rates are in the dead calm world of benign neglect.
The Morning Track benign
- The Morning Track - Benign by Bob Savage/articles/the-morning-track-benign/
Most see the low volume, low volatility world of markets as benign, not malignant, despite the scares from inverted yield curves, 4Q price action PTSD and ongoing geopolitical uncertainty from Brexit to US/China to elections from Australia to Israel to India and Spain. Anyone looking down from above would see oil at 5-month highs and China iron ore at record highs grinding against the easy money policy of central bankers moving from normalization to wait-and-see. The new fear for investors is in missing out, in the upside to growth forecasts, to realizing there is no alternative to risky assets in a world of negative real rates. The confusion over how to create inflation after years of disinflation in Japan and Europe and below target in the US leaves more extreme measures in the wings. Fiscal not monetary policy will remain the focus just about everywhere making economics political more than model driven. This doesn’t mean that there aren’t notable headlines moving
markets, only that it’s not about the data but politics, to wit:
• Saudi Aramco bond orders over $75bn – with price not expected to be tighter than the sovereign debt. The company will issue 6 bonds from 3Y to 30Y.
• Libya civil war continues with forces of General Haftar carrying out airstrikes on Tripoli.
• Trump proposes new tariffs of $11bn on EU imports to offset Airbus subsidies. This comes as the EU and China start summit talks in Brussels.
• Iran puts US central command on its terror list in a tit-for-tat move after the US labels the Iran Revolutionary Guard a terror organization.
This makes the dull trading seem unsustainable, with focus on Super Wednesday and perhaps a bit more from the US on politics and forecasts with the IMF expected to lower its global growth view from 3.5% this morning. The USD is offered and remains vulnerable to a risk-on return but for now, FX and rates are in the dead calm world of benign neglect.
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Track
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Robert Savage
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