EUR 9.24 For Business Accounts Only

The Morning Track pleased

- The Morning Track - Pleased by Bob Savage
http://track.com/articles/the-morning-track-pleased/

Plants are sensitive to the noises we make – and they are barometers for the mood of the moment according new studies – making that dead plant in the corner office tell you a lot about the boss. Perhaps the same is true again for markets as we end the week of FOMC speakers. The Yellen speech overnight was good enough to send rates higher, USD stronger in Asia – she said she was “pleased” by the economic outlook. The tie-breaker will be the actual US data ahead – retail sales, PPI and University of Michigan Consumer Sentiment. The “Trumpflation” trade has been the bigger story of the week – unwinding after the press conference – and yet still viewed more as a correction than a reversal from Mid-December dominated by hope that fiscal stimulus, tax cuts, deregulation will drive growth. The data overnight isn’t changing the doubters as the stronger USD hits at China exports but they were basically flat in CNY terms suggesting volume holds. The commodi
ty complex won’t like this story and its subtracting from iron, oil accordingly. The Bank of Korea left rates on hold as expected – still at historic lows – and that is not different from the BOE, ECB or BOJ leaving the USD bears little room for comfort overnight as the divergence trade remains obvious. The FOMC is going to hike again 2-3 times in 2017 leaving little comfort for those struggling to see inflation other than imported from a weak FX process. This leaves the US markets to watch the US dollar index as a risk factor for deflation abroad again – with 101.30 the 55-day average central to the weekly close. Perhaps that is what makes Yellen pleased going into the holiday weekend, or perhaps it’s the financial stability shown with the bubble fears everywhere eroding.