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The Morning Track pause-2

- The Morning Track – Pause by Bob Savage
http://trackresearch.com/articles/the-morning-track-pause-2/

Warning long weekend pause ahead. The UK and US have Monday off and so markets are winding down into the holidays. The focus overnight was on the lack of fear rather than risk. Equities are higher but bonds aren’t lower thanks to Italy and Oil. The break in the risk-on and risk-off see-saw for these asset classes reflects a mismatch of timing fears more than any big news. The Trump canceling of the North Korea summit yesterday led to modest risk-off but overnight this unwound, North Korea said it was still willing to meet the US President – “anytime and any way.” The economic data overnight was mixed. The Japan Tokyo core CPI was lower than expected while the German IFO slightly better – or at least not worse. UK GDP for 1Q was unrevised – still the weakest in 5-years. There was a flip from bearish to bullish in equities from Asia to Europe but not much else. FX seemed to have a bit of noise worth noting:
1) SEK gain to 2M highs vs. EUR at 10.22 after the Swedish National Debt Office statement said that it will take a position for a stronger currency against the euro, aiming to reduce the cost of central government debt.
2) GBP weaker after GDP unrevised at 5-year lows and Brexit headlines remain ugly. The European Union dismissed many of the U.K.’s plans for their post-Brexit relationship as little short of “fantasy” as the mood of negotiations deteriorated and progress stalled.
3) TRY reversed from 4.85 to 4.70 now 4.74 flat after Turkey's central bank said it will allow exporters to repay dollar loans in the domestic currency.
As for the real mover on the day, beyond core EU bonds and spreads to the periphery, the main story is oil with Saudi expecting the ARAMCO IPO in 2019 and the oil trade of inflation unwinding sharply. Watching $66.75 (55 day m.a.) next for WTI.