Watch bonds – not forex. The 55-day at 2.174% seems to be the key for today and next week with 2.121% the June 26 lows. For the stalwart who want a longer-term risk guide, stick to JPY writes Bob Savage, CEO of Track Research in his Friday commentary.

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The news flows this week were all about geopolitical risks – not about economics – and that makes the really long term news, call them the icebergs, get lost in the tape - like the discovery of another 91 volcanoes under the Antarctic.

The fear of global warming and rising oceans isn’t the immediate driver today. The pain trade in equities extends overnight blamed on the terror attacks in Barcelona and the ongoing turmoil of US politics. This was the sixth car attack in Europe in 2 years - killing 13 and injuring dozens – and experts seem to be throwing up their hands saying little can be done to prevent further such acts.

While in the US the charge that Republicans can’t govern rings louder in voter minds as polls suggest a surge to Democrats in 2018. Threats of more Trump cabinet turmoil adds to the jitters – like Cohen vs. Bannon in a power struggle for the soul of the president.

The obvious caution to both macro drivers is that all are known unknowns and no one of them should be sufficient to kill risk. Rather, the fact that it’s late summer and the volumes of all markets are light maybe a better explanation for the jump up in volatility derived from uncertainty.

The longer-term risks like the FOMC balance sheet normalization upending credit spreads, or the ECB tapering, or the Chinese growth and deleveraging balancing act – those are the icebergs to watch for in September, just not now.

What seems to be clear for investors today is the rush to safe-havens, a bit like counting the lifeboats, and seeing which has the least leaks – JPY, Gold, Bonds.

The market is watching for the bigger breakout in all three with Japanese yen (JPY/USD) at 108.70, Gold at $1300 and US 10Y yields at 2.12% all in play.

For the easiest to see moving today – watch bonds – not forex. The 55-day at 2.174% seems to be the key for today and next week with 2.121% the June 26 lows.

For the stalwart who want a longer-term risk guide stick to JPY as the Swiss franc/euro (EUR/CHF) seems caught with 1.1270 EUR/CHF. JPY is breaking down with 109.25 opening a test to 108.10 next week (the April 17 lows for the year).

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