The bid to the USD means trouble for risk even as equities hold big gains from Asia and Europe follows more modestly. The safe-haven signals of Japanese yen (USD/JPY) and Swiss franc (USD/CHF) seem at odds with Dr. Copper and other metals, writes Bob Savage Friday.
Summertime begets travel and that means scratchy radio music in the car – where in some parts of the country there are two types of music – Country and Western – even though it’s hard to tell them apart.
Diversity doesn’t always seem so simple. The same is true in markets today as there seems to be a dual citizenship problem for Europe and the UK cynically started by someone who claims Scotch and German ancestry.
The Trump visit to UK proved to be the event that shifted the risk sentiment overnight, with two statements moving markets:
– first that a US-UK trade deal may prove impossible with UK May’s Brexit plan along with his endorsement of Boris Johnson as a potential “great PM.”
–and second another swipe at EU immigration policy.
The British pound (USD/GPB) and Gilts reflect this and that bleeds into EU bonds.
China trade and M2 data also don’t help as its clear that the PBOC remains tight and that the shadow bank system is being further controlled hitting leverage just as trade reflects significantly less domestic demand.
Earnings in the U.S. will be a key focus along with the Fed reaction functions after a week where risk-on holds despite trade fears.
The biggest stories seem less important when it’s Friday and summer beckons. Watching 95.53 for more fireworks – though they may be more about France and the World Cup than the U.S. and its independence.
View Bob Savage at TradersExpo New York in brief video interviews recorded Feb. 9:
How to create a risk parity portfolio
Duration: 3:25
How I pick assets on the basis of highest yield
Duration: 3:31
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