EUR 8.90 For Business Accounts Only

The Morning Track grinding-2

- The Morning Track - Grinding by Bob Savage
http://track.com/articles/the-morning-track-grinding-2/

Without friction, there is no meal. This is the lesson for those looking to make money out of markets as the US returns from Labor Day and the fears about North Korea again seem overblown. This despite talk of more ICBM launches being likely and the fear that it’s too late to force North Korea to undo its nuclear capabilities. South Korea wants China to stop selling oil to North Korea – that might work but it also might change the regime and lead to millions at the China border. The other story that seems to dominate focus is about Irma – Harvey’s younger hurricane sister – and one that is approaching the US Florida shores Friday. The oil market is back up, the USD is flat, bonds are bid, equities lower, but mostly choppy over the two trading days so far. News flows overnight are about growth with Service PMIs showing China growing, Europe flat, UK lower. The only way to grind out profits is to trade ranges rather than chase trends so far this week. This may
be about to change should FOMC speakers matter and tilt from doves to hawks or should the US data force that thinking upon them. But there isn’t much more to hope for in a day that many see as the start of Autumn trading even though technically we have 2 weekend left of summer. The break of JPY to US rates is capturing a bit of attention but that seems less clear cut with US bonds bid near the 2017 low yields. The Norway Fund story maybe worth reading – as that highlights the limits to JGBs – but this also leads to doubts about EM bonds as well making the stretch for safety in uncertain times that much more complicated. In the interim, we remain focus on 2.088% August 29 low yields in US 10-year bonds against 2.18% resistance – and risks for higher should the grind produce a real meal for growth in the weeks ahead.