EUR 8.84 For Business Accounts Only

The Morning Track leveling-up

- The Morning Track - Leveling Up by Bob Savage
http://track.com/articles/the-morning-track-leveling-up/

The game for markets balances fear with greed and today continues the new level for greed as the global equity markets extend their rallies, the hunt for yield brings the improbable value to bonds – and central bankers talking drives to trade faster and further along the well-worn trends. The Dudley comments yesterday and the Carney comments today are a compare and contrast story for GBP which remains the focus in FX. In commodities – the supply from Libya and the API report today generates enough fear for new yearly lows in Brent. For bonds, the floating of a 100-year Argentina bond (7.9% yields on $2.75bn) highlights the madness of the QE world (not in the 200 years of history, Argentina has default 8 times.) Then again, investors need just 12 years to make this good and a rate cut from the central bank would make it a winner. Of course, the CHF might be worth using as a proxy funding agent as the SNB Jordan comments today made clear, CHF is overvalued, and policy is
n’t going to change with -0.75% sight deposits, it’s cheap to fund more speculative investments. JPY isn’t far behind as it scratches 3-week lows post the BOJ doing nothing. So, it goes – leveling up duration, leveling up talk on financial stability against financial conditions. Today, talk about a S&P UK talk downgrade risk ahead of Brexit coupled with the Carney speech – now isn’t the time to raise rates – left GBP lower and the USD stronger.