The Morning Track btd-vs-sim
- The Morning Track – BTD vs. SIM by Bob Savage
http://track.com/articles/the-morning-track-btd-vs-sim/
We remain stuck in buy-the-dip against sell-in-May trading. This was a long weekend for news - as Labour gained against the Conservatives in the UK polling; North Korea tested another missile dashing hopes for easy relations with the new South Korean President; the Spanish Socialist opposition party chose Sanchez, who is willing to align with the anti-establishment Podemos Party, calling into question the stability of the present conservative minority government and a White House official close to President Trump was named as a person of interest in the FBI Russia Probe. All of this brought risk-off back after two days of buying-the-dip but Asia managed to shrug off geopolitical fears with iron ore and oil higher and equities bounced back as they did in the US from Thursday. The lesson is clear, long volatility and short carry is a recipe for disaster in trading these markets. The US dollar index is tracking the US bond markets, bonds track equities and the focus abroad
is on signals from central bankers and politicians this week. CAD and EUR are both under scrutiny and in play on such policy shift hopes while the US markets are now in full-doubt mode for an FOMC June move with some banks now expecting a pause. The big surprise this morning came from Merkel as she talks about the EUR being too weak perhaps buying some further support into her election and ahead of the G7 meetings. Nevertheless, the 10Y US yield remains the key driver for many things – and perhaps is the best barometer for measuring the battle between BTD and SIM today.