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EUR 22.80
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http://track.com/articles/the-weekly-track-carnaval/
The calendar matters to moods. Next week is a shortened week for the US markets given the Monday is US Presidents’ holiday. For much of the world it’s the lead up to Mardi Gras with the calendar for Easter bringing Lent early this year on March 1. This means unofficial parties, festivals and parades cover the globe from Germany to Brazil to Spain and Mexico – a party before the party and the denials thereafter. The lesson for markets is in the risk reversals. Mood swings dominated the last week and many see them continuing into next. Positions need to reflect the increase in consolidating moves rather than extensions of trends. The divergence of equity performance from bond performance has returned to haunt markets in February. Bonds in the US reflect greater uncertainty than that of equities. Bonds in Europe show political risks for France, Netherlands and Italy. Bonds in Asia reflect the ongoing concerns about US trade policy shifts and the role of policy fr
om the PBOC and BOJ. In a word – rates reflect global divergence. All this has left the FX market less clear with the carry trade pausing Thursday and Friday for many of the EM FX pairs. They like trees don’t grow to the sky. The EUR/JPY has become the risk barometer again with the break of 120 opening a larger move to 115.
The Weekly Track carnaval
- The Weekly Track - Carnaval by Bob Savagehttp://track.com/articles/the-weekly-track-carnaval/
The calendar matters to moods. Next week is a shortened week for the US markets given the Monday is US Presidents’ holiday. For much of the world it’s the lead up to Mardi Gras with the calendar for Easter bringing Lent early this year on March 1. This means unofficial parties, festivals and parades cover the globe from Germany to Brazil to Spain and Mexico – a party before the party and the denials thereafter. The lesson for markets is in the risk reversals. Mood swings dominated the last week and many see them continuing into next. Positions need to reflect the increase in consolidating moves rather than extensions of trends. The divergence of equity performance from bond performance has returned to haunt markets in February. Bonds in the US reflect greater uncertainty than that of equities. Bonds in Europe show political risks for France, Netherlands and Italy. Bonds in Asia reflect the ongoing concerns about US trade policy shifts and the role of policy fr
om the PBOC and BOJ. In a word – rates reflect global divergence. All this has left the FX market less clear with the carry trade pausing Thursday and Friday for many of the EM FX pairs. They like trees don’t grow to the sky. The EUR/JPY has become the risk barometer again with the break of 120 opening a larger move to 115.
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Robert Savage
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