EUR 9.24 For Business Accounts Only

The Morning Track hard-or-soft

- The Morning Track – Hard or Soft? by Bob Savage
http://track.com/articles/the-morning-track-hard-or-soft/

The difference between hard and soft eggs is one of timing. The difference between hard and soft deals is something else – and that “art of the deal” isn’t like cooking even though many see boiling tempers as part of the ingredients for success. Markets are looking at a hard “Brexit” - a clean break from the EU trade deal - as UK May in the UK Guardian report suggested such. Trump followed in a UK Times interview saying “I’ll do a deal with Britain.” The net result – stronger USD except in JPY with bonds up, stocks down. This isn’t a “Trumpflation” story but a UK Brexit one but one where EM isn’t as happy as in the summer of 2016. The weekend brought talk of a US/Russia summit plan, China making clear it’s unhappy with Trump and his confusion over the One-China policy and China Xi suggesting 2016 GDP was 6.7% - nothing new but all a reminder that the world is more about politics than policy. The data from Japan was good and bad – with t
he inflation up, growth mixed. BOJ remains watching slow deflation unwind with little chance of the 2% target soon. JPY gains against the GBP suggest there is more to the story and underscore how hard it is for the BOJ to shift inflation expectations in an uncertain world. The next hardest job will be BOE Carney as he frontloaded the Brexit medicine leading to GBP weakness but the inflation vs. growth mix may drive more politics than confidence. GBP is the trade of the day with 1.1840 the flash crash lows the next big support.