EUR 9.06 For Business Accounts Only

The Morning Track doves

- The Morning Track - Doves by Bob Savage
http://track.com/articles/the-morning-track-doves/

Central bankers are either doves or hawks – or so the press and market would have you think. The reality is that most are economists with a keen sense of doing something good for the majority rather than the plutocratic minority. Today Fed speakers are expected to matter and both are of the dovish bent. A FOMC rate hike in March is not expected. The one for June is half-heartedly priced. The Fed reaction function is totally unclear and that is where the doves come in. The lessons for them from overnight matter as well as the RBNZ sounded like a dove and acted hawkishly – moving from easy to neutral in its policy path but forecasting a longer period for not moving rates because of the NZD strength. The RBA sounded content but worried about the housing bubble- like their RBNZ friends. The BOJ was bent on its easy money process targeting 0% in 10Y rates despite talk that the US might matter to them – and that at Fed rate hike in June or anytime means they have less t
o do. This wasn’t how they think about it – and with the Abe/Trump meeting tomorrow all eyes are on Japan. Europe didn’t get much more than another French poll showing Le Pen losing in the 2nd round and winning in the first. The German trade surplus stands out as yet another issue for the Trump team to harangue with the EUR stuck in a tight consolidation unable to slip below 1.06 again. All this put the Fed speakers and the data today into perspective as mattering in a world where buying risk assets was in vogue because of central bankers. The JPY isn’t yet flashing risk-on like EM or other markets and that maybe the key part for watching today – JPY 112.75 may be enough to get the S&P500 to new highs or vice versa – correlations work, causality seems murky like the logic of the doves with full employment and prices near the sacred 2% target.