EUR 8.70 For Business Accounts Only

The Morning Track fizzle

- The Morning Track – Fizzle by Bob Savage
http://trackresearch.com/articles/the-morning-track-fizzle/

The sizzle of US tax reform hope has flipped to a fizzle of doubts with growth and reflation trades reverting to the mean globally – oil, copper, most equities are all lower. US stocks continued the tax reform rotation dance with Tech losing in the Senate last minute detail switches, Banks winning driving the rest of the world to rethink their own winners and losers. GBP reverses further as the Brexit deal on Ireland busts, but the dollar isn’t higher elsewhere and EM FX mostly bounces back. The UK expectations are still high for a winning moment even as PMI fell back as prices rise to levels where demand shrinks. That isn’t to say there aren’t some other winners - Greek debt is on fire with the 10Y spread 40bp tighter to a 3 year low of 465bp upon news a staff level agreement with Greece has been reached and the final disbursement decision might come at the 22 January Eurogroup meeting. But politics cast a long shadow – as Catalan starts its campaigns for new
government even as the previous ones remain in jail or in Brussels. A Spanish Judge withdraws the arrest warrant for Catalan leader Puigdemont making some think the vote could be more dangerous. The overnight news from the RBA and RBNZ was supportive for A$ and NZ$ along with slightly better data. The Service PMI reports were mixed with China better, Japan weaker, Europe seeing Germany off the flash, Spain weaker while France leads. All this wasn’t enough to change the way markets view the price action – and that is all that really matters today – flows are for safety more than risk. The key FX example today is in GBP with the risk of a 1.3370 break rising.