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EUR 8.50
For Business Accounts Only
http://track.com/articles/the-morning-track-trains/
The US bond markets are reflecting a new factor – US fiscal spending risks on top of the FOMC December rate hike risks and the start of the balance sheet normalization. The rest of the world is joining in as the German Bund 10-year yields break 0.50%. The growth story in Europe remains intact but the mood is changing and inflation is higher in Germany and lower in Spain. The Sentiment data is mixed but also stronger making the ECB comments that much more important. The BOJ Kuroda comment overnight was as expected - but JGBs are dragged with US and EU. The worries about missing the train are getting more intense - particularly for investors - as global growth has sparked the idea of global inflation and with it a more dramatic shift in asset allocation. All of this helps financial equities, and hurts more rate sensitive ones. Oil being up perhaps is the simple story, USD consolidating as EU rates catch up is another. What hasn’t happened for equities is a capitulation
rally but some maybe inclined to think we are close because not everyone is on board. For now the simple story is about rates and the break of US 10Y yields at 2.33% overnight is important for 2.50-2.65% retests should all the new factors happen.
The Morning Track trains
- The Morning Track - Trains by Bob Savagehttp://track.com/articles/the-morning-track-trains/
The US bond markets are reflecting a new factor – US fiscal spending risks on top of the FOMC December rate hike risks and the start of the balance sheet normalization. The rest of the world is joining in as the German Bund 10-year yields break 0.50%. The growth story in Europe remains intact but the mood is changing and inflation is higher in Germany and lower in Spain. The Sentiment data is mixed but also stronger making the ECB comments that much more important. The BOJ Kuroda comment overnight was as expected - but JGBs are dragged with US and EU. The worries about missing the train are getting more intense - particularly for investors - as global growth has sparked the idea of global inflation and with it a more dramatic shift in asset allocation. All of this helps financial equities, and hurts more rate sensitive ones. Oil being up perhaps is the simple story, USD consolidating as EU rates catch up is another. What hasn’t happened for equities is a capitulation
rally but some maybe inclined to think we are close because not everyone is on board. For now the simple story is about rates and the break of US 10Y yields at 2.33% overnight is important for 2.50-2.65% retests should all the new factors happen.
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Robert Savage
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