EUR 21.76 For Business Accounts Only

The Weekly Track moderation

- The Weekly Track – Moderation by Bob Savage
http://trackresearch.com/articles/the-weekly-track-moderation/

Markets shifted again last week, from a galloping bull to a angry bear, from a bouncing risk-on mood into month-end turning negative with moderating growth signals, further rate hike expectations for the US and a Trump steel tariff leading to global trade war fears. The inflation vs. deflation battle restarted despite FOMC Powell testimony sounding the bell for upside risks for both growth and inflation. Next week isn’t likely to shift way from the politics or policy debates. As many await the results of the Italian election (due 5pm ET Sunday) the threat of more extreme parties continues to hang over Europe. This leaves the Merkel victory of the SPD for another grand coalition as less inspiring – but important as it ends 5-months of political stalemate since the election. While the week ahead will give respect to the Friday US jobs report, the speeches from the FOMC on tariffs and policy, the RBA, BOC, ECB rate decisions, and the ongoing Brexit talks - all remain more
likely to dominate markets and keep uncertainty high – leaving all markets to have higher volatility. Throw in an unhealthy set of headlines about Iran’s ballistic missile work – after Russia’s invincible missile threat last week and you have geopolitical fears back in play as well. The roar of the March lion driving fear over greed last week, brought the technical picture of another test lower in global equities as the most likely path. The pain trade of long oil and short USD continues to unwind but the biggest movers and worst performers were in AUD, CAD and GBP as the positions look off-sides to the commodity risks as the world flirts with trade wars. The themes for growth and higher rates being justified that helped moderate the bears in February, was lost as we started March. Moderation of politics, policy and economic data doesn’t mix in a world looking for change.