EUR 9.28 For Business Accounts Only

The Morning Track no-appetite

- The Morning Track – No Appetite by Bob Savage
http://track.com/articles/the-morning-track-no-appetite/

The global appetite for risk has disappeared. Safe-haven buying returns with gold, JPY, CHF and bonds leading. The reversal in mood from the Macron pyhric victory in the French Presidential Debate to the drop in oil and raw nerves about Trump passing his ACA repeal and replace plan – all leave many wondering if this is a correction or something larger. The lack of bigger stories to shake markets back to trend may be key in understanding how to trade today. The North Korean failed missile launch didn’t matter. The Japan trade surplus didn’t matter, the hawkish Fed comments from Rosengren and Mester didn’t matter. The API inventory build in US crude oil – that mattered and its symptomatic of a larger illness as the bull run in equities takes a breather and perhaps risks more than a 1.2% pain. We are in a market that maybe struggling with higher US rates given the expectation shift that fiscal stimulus for the economy won’t be simple or evident until 2018. T
he confidence boost for such has already been priced, so the reality is that unless the FOMC doen’t hike faster or the rest of the world grows better, (and doesn’t hike like the US), then markets are caught in consolidation if not correction mode. The US bond market has returned again from 2.55% 10Y and looks set for 2.38% again. The only two trends that seem most clear today for markets are in gold with $1260 back in play and JPY 109.60. The lower growth, lower inflation outlook is at odds with the BOJ minutes and the risk of disappointment in Asia maybe the lead for trouble in the US and Europe again.