EUR 9.28 For Business Accounts Only

The Morning Track holding-on-2

- The Morning Track – Holding On? by Bob Savage
http://track.com/articles/the-morning-track-holding-on-2/

The RBNZ was on hold and sounded appropriately dovish reversing the NZD rally over the last few weeks post a much higher CPI. The UK BOE just did the same today. The BOE had 7-1 vote to hold – suggesting even less disagreement for the ongoing dovish policy. Holding on to CPI higher as a driver for global rate normalization hasn’t yet been a winning trade except in the US. Rather the universal theme from central bankers from the BOJ, Riksbank and other minutes – all show a fear about geopolitical issues and foreign demand hitting back at the nascent growth for 2017. Everyone is seeing through upside inflation risks. The oil markets, US policy confusion, elections in Europe – all are still to blame for central bankers holding on to extraordinary easy money policy – QE and negative rates – leaving investors no room to hide in bonds or cash without consequence. But this doesn’t really support a happy “Goldilocks” moment where rates aren’t too hot or too c
old allowing for a larger equity appetite. Fears are about positioning, lack of momentum and general slowdowns in volumes. The FX markets barely moved except for NZD overnight and that is telling. The steady as she goes policy everywhere isn’t helping and that leaves the US and the FOMC for June as a key risk factor again. Bears in the USD have lost ground while bears in oil are a long way from $46 breakdowns. All of which leaves the fear gauges still mixed with JPY over 114 and Gold below $1247 200-day. The reflation trade in the US holds for now but PPI today maybe key along with more politics. If you wonder when fingers slip watch gold today for some sign of fear beating greed but $1195 seems more likely for now.