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EUR 23.10
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http://track.com/articles/the-weekly-track-january-effect/
Driving down a road with too much snow and too little visibility – this is the perfect analogy for January asset markets. We all want to get where we are going – with more profits from our positions – but the path forward looks pretty and dangerous at the same time. The US East Coast got a lot of snow this weekend. It will be a factor in how people think about the week ahead. Winter kicks into full gear along with markets as the Christmas Holiday vacations are gone as well. The focus for many is on what matters most to markets and where they can make money. The rally up in US shares Friday sets the tone and the Traders Almanac will have you believe we are set for another good equity market return in the US accordingly. The January effect isn’t just about whether but also about moods and now those translate into rotations of assets. The big call from November has been in the shift from bonds to stocks. That stalled over the last two weeks and it may return ne
xt week. The January effect on equities has always been well understood and the seasonality of that market well studied. The effect of all of this on bonds has been less clear if only because of central bankers, particularly in the last 8 years post the great recession. The role of QE and negative rates in 2016 in turning markets should not be underestimated and the role of those reversing over 2017 and beyond maybe similarly important. The risk reward for many investors is in the certainty of policy – with US rates certain to go up and EU and Japan expected to do nothing. This is the central risk for many and it will be a battleground in bond flows and FX accordingly. The USD maybe the bellwether for understanding these relationships and what matters most will be made clear accordingly. For now, the USD washout over the last 2 weeks appears to be enough and that might mean that the rest is set by equities and the responses of other nations to the stronger US capital
flows.
The Weekly Track january-effect
- The Weekly Track – January Effect by Bob Savagehttp://track.com/articles/the-weekly-track-january-effect/
Driving down a road with too much snow and too little visibility – this is the perfect analogy for January asset markets. We all want to get where we are going – with more profits from our positions – but the path forward looks pretty and dangerous at the same time. The US East Coast got a lot of snow this weekend. It will be a factor in how people think about the week ahead. Winter kicks into full gear along with markets as the Christmas Holiday vacations are gone as well. The focus for many is on what matters most to markets and where they can make money. The rally up in US shares Friday sets the tone and the Traders Almanac will have you believe we are set for another good equity market return in the US accordingly. The January effect isn’t just about whether but also about moods and now those translate into rotations of assets. The big call from November has been in the shift from bonds to stocks. That stalled over the last two weeks and it may return ne
xt week. The January effect on equities has always been well understood and the seasonality of that market well studied. The effect of all of this on bonds has been less clear if only because of central bankers, particularly in the last 8 years post the great recession. The role of QE and negative rates in 2016 in turning markets should not be underestimated and the role of those reversing over 2017 and beyond maybe similarly important. The risk reward for many investors is in the certainty of policy – with US rates certain to go up and EU and Japan expected to do nothing. This is the central risk for many and it will be a battleground in bond flows and FX accordingly. The USD maybe the bellwether for understanding these relationships and what matters most will be made clear accordingly. For now, the USD washout over the last 2 weeks appears to be enough and that might mean that the rest is set by equities and the responses of other nations to the stronger US capital
flows.
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Robert Savage
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