EUR 8.70 For Business Accounts Only

The Morning Track no-trade-war

- The Morning Track - No Trade War? by Bob Savage
http://trackresearch.com/articles/the-morning-track-no-trade-war/

While the relief rally on the US government funding itself supports bonds and helps the USD, it may not be sufficient to overcome the other Trump move yesterday to impose up to 30% tariffs on solar panels and 50% tariffs on washing machines. South Korea will file a petition with WTO against the U.S. for imposing anti-dumping duties on Korean washing machine and solar panel makers while China’s Commerce Ministry blasted the tariffs as an “abuse of trade remedy measures.” The Mexican government said it will use “all legal resources at its disposal” in response. This isn’t yet a trade war but a battle of words leading to a battle in courts first. The risk for the US remains one about money and so far the USD is nowhere but gold, CHF and JPY are all stronger this morning and that’s important given that the BOJ Kuroda did his best to deny any stealth tapering plans for Japan. The JPY gains started when the BOJ shifted its view on inflation expectations and contin
ued when Kuroda spoke. What seems most interesting today is that ongoing breakdown of correlations between asset classes. Equities globally are bid, though beginning to fray in Europe and soggy in the US futures. Bonds are bid reflecting the relief rally on the US government reopening. The USD is nowhere but weaker against the safe-havens. The commodities are mixed with oil and gold bid but copper and iron ore weaker. The reaction to the US headlines from yesterday dominates the trading today. The risk-barometer is flashing yellow even as the trend players in risk assets are rushing forward. Watching JPY for confirmation that today won’t have a bigger accident. That is how wars start, not by design but by mistake.