EUR 21.16 For Business Accounts Only

The Weekly Track focal-points

- The Weekly Track – Focal Points by Bob Savage
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When you can’t see clearly, most people slow down, perhaps that is the story for markets ahead. The horizon is hazy, it’s the middle of summer, the economic and political calendar is light and but the fear of markets abates with clear skies after a heavy week of news last week. The weather analogy for markets seems appropriate as we suffer another week of micro bursts between hot and humid days. The US picture of “goldilocks” markets continues as the US jobs report provided strong enough growth without much inflation. The FOMC will hike in September but the path ahead remains “gradual” and not likely to exceed expectations. The ongoing strong 2Q corporate revenues justify US shares and the lack of any clear pain from US tariffs and retaliation abroad suggest waiting and seeing work. Of course, this wasn’t so easy abroad, the BOE hiked 25bps but fears of a policy mistake rose wrapped around chances for a no-deal Brexit. The China PBOC raised its reserves on CN
Y forwards from 0% to 20% capping the USD rally and driving up Friday risk moods, leaving the data on growth and inflation in China in the week ahead as central to the storyline above. The porridge is just right for putting the plane on autopilot and catching a nap. But this seems riskier than logic would have it given the ongoing search for whether trade tariffs and the disruption of business as usual translates into higher inflation, lower growth and even worse outlooks for Autumn – these are the focal points for the week ahead and likely the rest of the summer as markets grabble with discontent amidst the best of times.