Some people hike mountains, while others hike rates. Just when the climb seems most impossible, there will be a plateau with the glory of a view from the top, writes Bob Savage Tuesday.

The IMF cuts its global growth outlook from 3.9% to 3.7% suggesting a growth plateau, and yet, rates are higher globally with curves steeper and U.S. 10-year touching 7-year high yields.

Equities decline in Europe and Asia and futures point to lower in the U.S. The U.S. dollar (USD) is up at 8-week highs.

This is a continuation of the Friday storm with the usual suspects:

--U.S./China trade war turning into a cold war;
--EU/Italy budget battles turning into a euro (EUR) breakdown/banking crisis;
--UK/EU Brexit no-deal outcome leading to a UK recession and uglier politics;
--U.S. midterm elections leading to a frozen government with fiscal recklessness;
--EM crisis getting worse – see Pakistan request an IMF bailout complicated by its China belt-road obligations; further natural disasters to drive up commodity prices and disrupt economies globally.

There was little economic news that really drove the markets overnight leaving the IMF meetings as the focus. Things are clearly out of balance with financial stability no longer the third rail for central bankers. This puts the burden on markets to find equilibrium with the USD divergence in growth and policy standing out, the EUR is the focus with 1.14 and 1.1280 the next targets.

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