EUR 9.28 For Business Accounts Only

The Morning Track march-madness

- The Morning Track – March Madness by Bob Savage
http://track.com/articles/the-morning-track-march-madness/

The next week matters more than today. US jobs are always a volatile event and they have proved with their strength the ability for the FOMC to be able to declare victory and hike rates. But whether today’s number is 240,000 non-farm payrolls as the whisper number suggests or not won’t matter as much as the wage story. Markets are geared up to believe in victory against deflation starting with Draghi yesterday and continuing with average hourly earnings today. If that disappoints then watch out. The bond selling in the US – 9 days straight to 2.62% 10Y yesterday – seems extraordinary and reflects more this faith in returning to normal markets. The trouble for most investors is that after 7 years – “normal” is barely remembered. Inflation has become a relic of history and yet somehow those that remember central bankers failing to contain it are driving up yield curves. Whether this plays out today or not won’t matter as much as next week with the US sp
ringing ahead on the clock, the Dutch voting, the BOJ and FOMC meeting and a host of other key political and economic events driving the most calm trader insane with news. March Madness is upon us all and the trends that are in place today – weaker oil – off 7.5% on the week, stronger USD up 2.5% since March, lower bonds – with yields up 20bps since March – all that could be in play again should the logic of the present unravel into the madness of the ides of March. There is a sense of binary outcomes ahead with either the USD breaking 103 or dropping back to 100 – whether it happens now or later doesn’t seem as important as the suggested volatility and risks in play.