EUR 9.28 For Business Accounts Only

The Morning Track changing-order

- The Morning Track – Changing Order by Bob Savage
http://track.com/articles/the-morning-track-changing-order/

Forget the raft of month-end data from flash EU inflation missing expectations with core at 0.8% or China PMI at 5-year highs or Japan industrial production rebounding 2% and unemployment at 23-year lows – the Trump executive orders today focus on trade as he orders a study on “trade abuse” ahead of his meetings with China Xi next week. Politics trump economics. The world is nervously stuck in month-end, quarter-end and a goldilocks environment where rates are flat, USD is lower, equities are mixed and commodities in the middle of the range. US President Trump is changing the order of his agenda with trade back in focus as he needs a win post the healthcare loss last week. The risk seems obvious – that we see a trade war evolve and that the BAT becomes a reality. This flies in the face of the EM carry and selling volatility trades that have ruled March. Markets are in a changing state but one that is masked by the month-end, quarter-end fluff. The noise of toda
y maybe swept away as April showers clear the picture. The USD up trade has two key drivers – one is fear from trade – and that maybe the key for now and the other is fear from higher US rates diverging from the rest of the world. What we are supposed to learn from the 1Q was that US growth was good but so was the rest of the world and so too there is room for rates going up everywhere. All that has seemingly been lost in the last week with oil lower and with doubts about Trump rising. Whether it continues will be simple to measure – with the USD still a two-legged stool and the changing order of the Trump agenda like that of market traders not sufficient to make it any more comfortable.