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http://trackresearch.com/articles/the-morning-track-quiet/
Quiet markets are the best in showing the underlying bias and trend with the modest moves across stocks and bonds highlighting the fears in foreign exchange. Today is the revenge of risk-parity as bonds and stocks are both bid, commodities are bid, inflation is low and the USD is flat but FX is moving. The volumes across markets are low and the search for information in the noise of price movement has to start in FX.
• SEK breaks 10 to EUR – most since Nov 2016 – with housing fears and Riksbank-on-hold thinking.
• CNY is flat in the last 3 days while the EUR is up 1.2% and the KRW up 1.8% - this despite the 10-year bond yields back near 4%.
• Bitcoin was off 5% after the company behind Tether reported a $31mn theft – now off just 0.3% with $8,281.95 highs in play still.
• TRY is off 0.9% to 3.9490 – new historic lows - as the central bank efforts to support the currency fail.
Now none of these points are big enough to change the thinking about low yields and low inflation lasting for a while into 2018. The RBA minutes and RBA Lowe speech overnight make clear the conundrum for 2017 remains in play as low wages make for lower inflation. For the UK, the better news about the CBI orders book – at near 30-year highs – was ignored as the public sector deficit rose and the budget tomorrow will be watched for sharing money both at home and with the EU for a divorce. The focus in the US day will be on housing and rates with Yellen’s chat with the former BOE King less about future policy than about how they think about the past working now. Clearly, as risk is flashing green and its quite quiet, it maybe more a parody to suggest its too quiet. The key for today mattering will not be in the USD or EUR or JPY – they are stuck in ranges, but the real consolidation range in play is in rates as the flattening of the yield curve continued overnight a
nd the US 10Y merits watching for either a 2.30% yield break or 2.38% rocket. The data ahead seems insufficient for either but anything is possible when it’s quiet.
The Morning Track quiet
- The Morning Track – Quiet by Bob Savagehttp://trackresearch.com/articles/the-morning-track-quiet/
Quiet markets are the best in showing the underlying bias and trend with the modest moves across stocks and bonds highlighting the fears in foreign exchange. Today is the revenge of risk-parity as bonds and stocks are both bid, commodities are bid, inflation is low and the USD is flat but FX is moving. The volumes across markets are low and the search for information in the noise of price movement has to start in FX.
• SEK breaks 10 to EUR – most since Nov 2016 – with housing fears and Riksbank-on-hold thinking.
• CNY is flat in the last 3 days while the EUR is up 1.2% and the KRW up 1.8% - this despite the 10-year bond yields back near 4%.
• Bitcoin was off 5% after the company behind Tether reported a $31mn theft – now off just 0.3% with $8,281.95 highs in play still.
• TRY is off 0.9% to 3.9490 – new historic lows - as the central bank efforts to support the currency fail.
Now none of these points are big enough to change the thinking about low yields and low inflation lasting for a while into 2018. The RBA minutes and RBA Lowe speech overnight make clear the conundrum for 2017 remains in play as low wages make for lower inflation. For the UK, the better news about the CBI orders book – at near 30-year highs – was ignored as the public sector deficit rose and the budget tomorrow will be watched for sharing money both at home and with the EU for a divorce. The focus in the US day will be on housing and rates with Yellen’s chat with the former BOE King less about future policy than about how they think about the past working now. Clearly, as risk is flashing green and its quite quiet, it maybe more a parody to suggest its too quiet. The key for today mattering will not be in the USD or EUR or JPY – they are stuck in ranges, but the real consolidation range in play is in rates as the flattening of the yield curve continued overnight a
nd the US 10Y merits watching for either a 2.30% yield break or 2.38% rocket. The data ahead seems insufficient for either but anything is possible when it’s quiet.
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Robert Savage
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