EUR 8.84 For Business Accounts Only

The Morning Track do-overs

- The Morning Track - Do-Overs by Bob Savage
http://track.com/articles/the-morning-track-do-overs/

There are move-overs, left-overs and do-overs. The reference applies to food as much to money. Perhaps the correlation is between bad food and bad markets. Markets are waiting to see if Draghi and other central bankers wanted to shift gears for higher rates or if this was a left-over fear from positioning into month-end or even more dramatically, if today Draghi has a do-over moment and puts easy money back into play. Curve flattening has flipped to bear-curve steepening trades globally. The important thing for trading all markets today is that Draghi isn’t alone. The BOE, BOC and FOMC all play a role in ratcheting up rate expectations. Consider what the Head of the Bank of Canada said overnight: “It does look as though those cuts have done their job. We’re just approaching a new interest rate decision, so I don’t want to prejudge that, but certainly we need to be at least considering that whole situation now that capacity -- excess capacity -- is being used up s
teadily,” Poloz said in CNBC interview. He has a chance like Draghi to clarify today. BOE Cunliffe overnight added to Carney support suggesting they have time to see the balancing power of economic slowdown over rising prices before having to hike. FOMC Yellen yesterday added to the position unwinds noting certain asset valuation were “somewhat rich.” The other factors that matter overnight revolve around the IMF cutting the US growth expectations in its Article IV review and in the US politics into July 4th with the Senate postponing the health-care vote. The spread between Trump Agenda hopes and real economy remains wide but most expect this to narrow and with its some of the upside to US markets. Also worth mentioning is the NSA blame in the latest cyberattacks globally – WannaCry link adds to US role. The fact that US rates are breaking out of their dull ranges to the upside hasn’t yet supported the USD – in part because of these factors and because much of
the move yesterday was about EUR strength. The risk to the US dollar index remains skewed lower and that leads other markets as well reflecting the strange twist of end-game rates, real growth and political uncertainty.