EUR 8.46 For Business Accounts Only

The Morning Track directionless

- The Morning Track - Directionless by Bob Savage
http://trackresearch.com/articles/the-morning-track-directionless/

You can’t get there from here. Whether you remember REM or Bert&I routines, the result is the same – sometimes you see what you want but you just can’t figure out the way to get it. The markets across the globe look directionless. The USD rally fizzles, but so too does any EUR bounce. Equities bounce but in the big picture remain stuck in consolidation. We are caught with data that suggest trade wars matter but growth remains good enough for now. China unveiled a package of targeted policies -- from a tax cut aimed at fostering research to special bonds for infrastructure investment -- to boost domestic demand as the trade dispute with the U.S. threatens to slow growth – so stocks there rally and but the CNY trades weaker and that begs the risk correlations we learned from the last 6 weeks. In Europe, better German Manufacturing flash PMI reports not sufficient to offset weaker Services elsewhere. Italy still a focus with Washington Post interview with FinMin Tr
ia saying “the reforms for welfare spending will be made within the limits of the planned deficit.” So BTPs are lower. Markets are bid up for bonds and stocks today in a relief rally that the world is stuck not falling further down the currency and trade war abyss. The role of mood in driving policy will be tested from Turkey to Hungary then later to the ECB with the next big hurdle for those that want to get bullish the US/EU trade meetings with Juncker and Trump. This puts the focus today on the sharp bounce back in metals and oil. It also puts the pressure back on US rates with supply today important. The equation of higher USD, lower EM, more fear changed a bit yesterday. Higher US rates remain in play and may still be the sore point for an otherwise directionless market.