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EUR 9.28
For Business Accounts Only
http://track.com/articles/the-morning-track-flat-world-2/
The cost of money is still cheap but the forward is going higher, just not in bond markets yet – and until that happens we are in the uneasy reality of seeing that the world is flat but believing in its eventual roundness. Supply in bonds meet demand and the risk-on mood has a subtle turn down today. Perhaps its about the eventual end game for debt and growth. The China downgrade by Moody’s to A1 from Aa3 – the first cut since 1989 - hit risk appetites early in Asia, with CNH down and AUD down even more as iron ore drops over 6%, Construction data is weaker and crosses continue to nag with the NZD up early on better trade data, higher milk price forecasts. The cut in China to A1 puts it on par with Japan, Saudi Arabia and Israel. The other focus overnight was on FOMC minutes today and Fed speakers with Philadelphia Fed Harker seeing wage pressures adding to June rate hike risks. But the more important focus maybe on the balance sheet and when the roll-off begins wit
h expectations of a June announcement leading to a September shrinking seen as a rising risk. Almost in lock-step the ECB Praet speech today left markets worried about QE ending and the periphery bonds suffer accordingly as the ECB economist sees the June policy meeting updating the assessment of risks and likely shifting forward guidance. ECB Vasiliauskas added to confirmation of forward guidance shift next month. UK terror alert raised to “critical†yesterday means more security and likely less travel into the start of the summer holiday season – something to watch for in the data ahead though UK PM May seems to have turned back some of the poll hit from last week with ICM Guardian showing 47% Conservative vs. 33% Labour – also UKIP will issue its manifesto tomorrow restarting the unofficial campaigning freeze. This puts the focus on how EUR/GBP trades with positions caught long GBP and looking a bit wobbly.
The Morning Track flat-world-2
- The Morning Track – Flat World? by Bob Savagehttp://track.com/articles/the-morning-track-flat-world-2/
The cost of money is still cheap but the forward is going higher, just not in bond markets yet – and until that happens we are in the uneasy reality of seeing that the world is flat but believing in its eventual roundness. Supply in bonds meet demand and the risk-on mood has a subtle turn down today. Perhaps its about the eventual end game for debt and growth. The China downgrade by Moody’s to A1 from Aa3 – the first cut since 1989 - hit risk appetites early in Asia, with CNH down and AUD down even more as iron ore drops over 6%, Construction data is weaker and crosses continue to nag with the NZD up early on better trade data, higher milk price forecasts. The cut in China to A1 puts it on par with Japan, Saudi Arabia and Israel. The other focus overnight was on FOMC minutes today and Fed speakers with Philadelphia Fed Harker seeing wage pressures adding to June rate hike risks. But the more important focus maybe on the balance sheet and when the roll-off begins wit
h expectations of a June announcement leading to a September shrinking seen as a rising risk. Almost in lock-step the ECB Praet speech today left markets worried about QE ending and the periphery bonds suffer accordingly as the ECB economist sees the June policy meeting updating the assessment of risks and likely shifting forward guidance. ECB Vasiliauskas added to confirmation of forward guidance shift next month. UK terror alert raised to “critical†yesterday means more security and likely less travel into the start of the summer holiday season – something to watch for in the data ahead though UK PM May seems to have turned back some of the poll hit from last week with ICM Guardian showing 47% Conservative vs. 33% Labour – also UKIP will issue its manifesto tomorrow restarting the unofficial campaigning freeze. This puts the focus on how EUR/GBP trades with positions caught long GBP and looking a bit wobbly.
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Robert Savage
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