EUR 9.38 For Business Accounts Only

The Morning Track upside-down

- The Morning Track – Upside Down? by Bob Savage
http://track.com/articles/the-morning-track-upside-down/

Perspective in the midst of lots of economic, political and central bank news is required today. Ideally done early on the beach but if you aren’t living in the right place, we know that locations are fungible in this mobile world and virtual reality will take us away – at least for a moment. There is a sense that the most important risks are almost gone from 2016 and that makes the rush for parking cash and cleaning up positions more important but for tape and the ongoing data. Changing opinions according to facts is not what happens when you have animal spirits and a bull market. The world is turned upside down with the only important block to further gains in the USD or shares the rate of the US bonds – and for that the price action into the heavy supply yesterday and the data ahead of the FOMC has left many thinking we have downside to yields and upside everywhere else. This puts the news from overnight into a different light – with China IP and retail sales
stronger – and good enough for the FOMC to hike without fears that China will implode due to debt. The weaker German ZEW isn’t enough to matter much but it does bring the EUR back to lower end of the range. The UK CPI was sufficient to keep the BOE meeting this week exciting but unlikely to shift QE merely forecasts. The net result is that we are all back to being bond traders first, FX second, equities third and lagging is oil which has managed to rally 5% and give up 4% yesterday, playing it over again today. No one is really that excited about anything but the holidays ahead and how the correlations of just about everything can turn upside down accordingly.