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Trading Today with an Eye on Rates and US Bonds
02/01/2018 11:54 am EST
So that is how we trade February 1 – with an eye on rates and a scan of any news that supports the argument. Watching U.S. bonds for the guide as no one wants them, loves them or believes in them, writes Bob Savage, CEO of Track Research Thursday.
Markets are returning to “normal” faster than many expected. German 10Y rates are back to 2015 highs. U.S. 10Y rates are back over the pre-FOMC levels with a March rate hike certain now. Rates are back driving forex and beginning to bother equities.
But the rally up in Japan overnight and in Italy is worth highlighting as equities also watch growth. The PMI reports today are the news and they are robust. They add to the “global coordinated recovery” story that drives commodities higher, supports corporate earnings and leaves 2018 the best start for many a decade in risk assets.
The troubles of month-end are gone and markets are thinking about balance of risks again. Inflation seems to be the obvious one and rate hikes the solution.
So that is how we trade February 1 – with an eye on rates and a scan of any news that supports the argument.
So far, the global PMI reports all point to more growth, more inflation, more confidence.
So why not take January and repeat it in February? The balance of fear has significantly shifted from the most hated rally to one that we just can’t get enough of…yet.
Watching U.S. bonds for the guide as no one wants them, loves them or believes in them.
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