Markets Watching Earnings, Hiring Report, Bonds, Dollar

01/31/2018 1:33 pm EST

Focus: MARKETS

Robert Savage

Partner & CEO, CCTrack Solutions

Markets will be watching the U.S. earnings – particularly Apple, the ADP hiring report for January and the price action in bonds to see if rates matter to more than the curve, writes Bob Savage, CEO of Track Research Wednesday.

This is month-end and the usual rules for markets are suspended as many investors change allocations and play for the books rather than absolute return.

This is also a FOMC decision day, the last for Chair Yellen, and likely a non-event, despite whispers to the contrary. There are still things to watch for from the FOMC particularly their guidance for rates in 2018.

Tuesday night the Trump SOU didn’t seem to shake the U.S. dollar (USD/EUR) downtrend much – nothing new on protectionism or fiscal issues but perhaps a bit more on the American moment as opposed to the Chinese century – leaves Asia content to own other things.

Trump is known for playing against the rules of decorum but his speech seemed far tamer if not boring. Focus for the rest of the evening wasn’t the economic data but the politics and the visit of UK May to China  is interesting as she warned Xi to play by global rules.

The battle of trade between US and China isn’t yet a real factor for investors but the divergence of confidence between them is making headlines and leaves the emerging markets on the front line with the flip-flop of Pakistan being the obvious example.

The rules of engagement for developed markets remain one about central bankers and the Eurozone flash CPI today was better than feared, leaving the expectations for the ECB tapering intact while the data from Japan was mixed and the BOJ sounds dovish again.

Markets will be watching the U.S. earnings – particularly Apple (AAPL), the ADP hiring report for January and the price action in bonds to see if rates matter to more than the curve. For the moment, the month-end rules of ignoring the price action seem to be wrong as the USD downtrend returns – particularly in EM but also notably for the EUR with 1.25 back in play.

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