EUR 8.40 For Business Accounts Only

The Morning Track like-a-lion-2

- The Morning Track – Like a Lion by Bob Savage
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Welcome to March, where markets like the weather, are greeted with the intensity of a fading trend be that winter or a bull market in risk or harsh economic data. The US GDP 4Q and better Chicago PMI led the selling of bonds yesterday and that supported the USD but it didn’t hurt risk moods. Overnight the China Caixin PMI was better even as Korea trade data was worse as exports fell sharply again. Japan saw better 4Q Capex, worse unemployment and weaker PMI. The focus in Europe was lower core HICP at 1% and as expected weak PMI reports. German jobs were stronger and retail sales robust. This data all matters but seems less of the driver for risk-on everywhere as its still all about US/China trade talks leading to a deal. The fear of a no-deal Brexit is also significantly lower and so that helps markets in Europe and the UK. Data becomes important when geopolitical fears are lower and that describes the start of March – the lion is more a symbol of strength than of
volatility as the first 2 months of 2019 have been kind to passive investors chasing momentum and looking for carry. Whether this can change in March will rest on the data dependency of central bankers and their reaction functions. Markets are set up for another test of 2800 in S&P500, which is the upper boundary of many value players. Without better data, the run up in global risk will seem more hope than fact. For those looking for a barometer – watch the AUD/JPY – its back in play with carry, US/China trade hopes, the rush up copper prices and the seemingly eternal easy money of the BOJ. The AUD will be waiting for the RBA and GDP next week and some confirmation of the easing expectations priced into the market. Until we break 80.75 the lion of the 2019 recovery may still just be a lamb in the making.