EUR 22.26 For Business Accounts Only

The Weekly Track left-unsaid

- The Weekly Track - Left Unsaid by Bob Savage
http://track.com/articles/the-weekly-track-left-unsaid/

The week past maybe remembered as the last full week of summer vacations for many in the US and Europe. The things that are left undone and unfinished in the bucket lists for vacation maybe the key regret factor for markets ahead. The drivers seem to be similarly, those things that weren’t said by policy makers last week. The end of summer is always bittersweet. The light volumes in markets and skittish price action of August has always been a distraction and it usually leads to a more concerning change of weather and mood for investors into September. The seasonality of August is usually benign but that of September and October has traditionally been painful. This is the set up for the week ahead - the last one for August - and the prelude to a month of great event risks from the ECB, FOMC rate decisions, to the Norway, New Zealand and German Elections, to the US debt ceiling and tax reforms debates. Politics and economics continue to clash. The mood-driver of the
market in August has been one about what is unsaid more than what is spoken. Friday’s ECB Draghi speech is a case in point as his lack of push back against the strong EUR has been taken as a sign of acceptance. The ECB contrasts with the Thai Central Bank that threatens capital controls or the RBA and RBNZ that openly talk about intervention risks. FX isn’t the only realm where not talking matters – witness the lack of forward guidance from FOMC Yellen in her speech Friday being taken as a signal that December hikes may not follow. The net result has been to see US rates remain at the lower end of their trading range while German Bunds are closer to the higher end. The other consequence has been an ongoing search by investors for some insurance, as many remain out-of-love with the present risk rally. The first hurricane to hit the US refinery rich Texas coast in 12 years also was important last week – as 130mph winds and up to 2 feet of rain hit the State and wit
h it expectations for US gasoline and diesel output. The effect on the energy markets maybe something to consider for weeks to come. So many have bought gold or more bonds to protect their positions into the expected storms of September.