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http://trackresearch.com/articles/the-morning-track-second-wave/
The tit-for-tat war on trade policy continues as the US President Trump approves $50bn of tariffs with the official USTR announcement expected later this morning and with China promises of retaliation. The US readies a second wave of $100bn trade tariffs on China, according to Reuters, and that put risk into a tail-spin pushing the S&P500 futures to -0.4% and it put a cap on USD gains with EUR reversing form 1.1543 lows. Offsetting this geopolitical issue is the last central bank decision – the BOJ left its policy unchanged and it cut its inflation forecasts – adding to dovish views about the rest of the world remaining easy even as the FOMC hikes. The other economic data today was minor – EU trade surplus maybe a sideshow but reminds everyone about US trade policy risks, while the labor cost jump underscores the ongoing need for reforms and productivity problems everywhere. The risk of today is in the exhaustion from a week of decisions leading to significant real
volatility – from fixed income in the US – touching 10Y 3% and now back looking at 2.80% to the USD where we see 11-month highs after 2 month lows, to US equities where the grind higher in the rally leaves doubters in the dust even as US trade policy, rate hikes and the rest of the world drag. This is the second wave of trouble for today as passive money will force active players to rethink just sitting back and waiting for another opportunity. The key risk-on and off tool if you believe the analysts today is the USD with 95 the key for a larger run.
The Morning Track second-wave
- The Morning Track – Second Wave by Bob Savagehttp://trackresearch.com/articles/the-morning-track-second-wave/
The tit-for-tat war on trade policy continues as the US President Trump approves $50bn of tariffs with the official USTR announcement expected later this morning and with China promises of retaliation. The US readies a second wave of $100bn trade tariffs on China, according to Reuters, and that put risk into a tail-spin pushing the S&P500 futures to -0.4% and it put a cap on USD gains with EUR reversing form 1.1543 lows. Offsetting this geopolitical issue is the last central bank decision – the BOJ left its policy unchanged and it cut its inflation forecasts – adding to dovish views about the rest of the world remaining easy even as the FOMC hikes. The other economic data today was minor – EU trade surplus maybe a sideshow but reminds everyone about US trade policy risks, while the labor cost jump underscores the ongoing need for reforms and productivity problems everywhere. The risk of today is in the exhaustion from a week of decisions leading to significant real
volatility – from fixed income in the US – touching 10Y 3% and now back looking at 2.80% to the USD where we see 11-month highs after 2 month lows, to US equities where the grind higher in the rally leaves doubters in the dust even as US trade policy, rate hikes and the rest of the world drag. This is the second wave of trouble for today as passive money will force active players to rethink just sitting back and waiting for another opportunity. The key risk-on and off tool if you believe the analysts today is the USD with 95 the key for a larger run.
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Robert Savage
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