EUR 8.70 For Business Accounts Only

The Morning Track seeing-the-forest

- The Morning Track – Seeing the Forest by Bob Savage
http://trackresearch.com/articles/the-morning-track-seeing-the-forest/

Trying to find leadership for macro markets is like trying to see the trees for the forest. There is a shift up again for equities even as
Global rates are higher with risk-on moods extending from headlines that North and South Korea plan to hold talks in “late April,” as long as regime safety is assured then denuclearization is on the table. There is a widening imbalance to the mood between bulls and bears, with the reduction of the fear of a global trade war going down in the US after Speaker of the House Ryan pushed against Trump tariffs, bulls won the yesterday. The hopes for a quick coalition build out of the ashes of the Italian election also inspires bulls today with Italian BTPs gaining back most of yesterday’s losses. Unwinding bad news isn’t the same as good news and that is important to the reasoning for the bears. But the lesson has been learned that politics just don’t matter much to markets. So it casts doubt on any North Korea inpsired rally now. This leaves monetary policy in control and with 2 key FOMC speakers today, pay attention. However, the lessons from overnight cast a shadow on
this fear – as the RBA warns on wage growth peaking, puts doubt on any future hike path – but the bonds sell off and AUD rallies from 2-month lows. BOJ Kuroda at confirmation hearings for his second term tried to recast his exit comments from Friday – but JGBs went lower anyway. There was little news in Europe other than the grind of supply in bonds leaving markets set up for another robust day in the US. This leaves the FX markets watching EUR still into the ECB Thursday and doubting that JPY can crack 105 – mixed that together and the barometer for risk maybe found in the EUR/JPY as it scratches the 200-day moving average at 131.40 and yearns for a melt-up like equities searching for the bullish trend amidst the noise. Watching 133.05 for some confirmation that we are out of the woods.