EUR 22.10 For Business Accounts Only

The Weekly Track never-better

- The Weekly Track – Never Better? by Bob Savage
http://track.com/articles/the-weekly-track-never-better/

The markets gave up on being bearish growth thanks to talk of rate normalization. The Bank of Canada joined the US FOMC in hiking rates and said it would do more depending on the data. The FOMC Chair Yellen vowed to normalize the balance sheet but was less clear on rate moves given the CPI. The ECB was mixed last week on its talk about rates with most now expecting a Draghi turnabout on QE in his Jackson Hole speech next month. The BOE similarly was less clear about rate action as Brexit and politics get more difficult. Summer is here and the momentum trades are winning with easy money, better global growth, and less fear about geopolitics, central bank policy shifts and worries about financial conditions. We are in the “Goldilocks” stage for markets not too hot, not too cold. US rates in 10-year yields reflect this point well running from Marc 14 highs at 2.628% to June 14 lows at 2.103% and then to 2.395% Tuesday, July 11. We are stuck in the middle of the rang
e – not too hot, not too cold. Bubbles are at bay. Price pressures for business and the consumer suggest there is room to grow without constraints. While this may be true for the US – the risk remains in other places – with German Bunds very much in the higher zone – still reflecting ECB worries. June 14 lows for 10-year Bund yields at 0.225% - still well above the -0.2059% July 6 2016 lows- flipped to 0.619% July 12 highs back to start of the year levels. With Bunds closing at 0.597% Friday, the risks about rates remains a European one. This drives the EUR and remains the only real constraint for summer bliss.