Equities are bouncing, markets are back to bargain hunting as the U.S./China trade talks continue, as Macron pledges tax cuts and wage hikes to placate the yellow-vest movement, as UK May delays her Brexit vote and tours Europe for a better deal, writes Bob Savage.
There are some uglier stories as well – as the Indian rupee (INR) drops 1.6% after another RBI Governor Urjit Patel resigns – the second in two years putting pressure on PM Modi to find a solution and to deal with his election loses in three key states, as Japan Topix closes at 18-month lows, as EU Juncker says there is “no room” for a Brexit renegotiation, as Italy PM pushes Europe to overcome its short-sighted rigor on fiscal policy rules.
What seems clear about today is that the U.S./China focus is lower and the European one is higher as the UK fears are kicked down the road and the ECB meeting and ending of QE supports the EUR.
Markets are in an ebullient mood even though very little good news has hit the tape:
Confidence fell in Australia, house prices are lower there as well.
Japan machine tool orders drop further.
China M1 and M2 suggest no new credit demand even as Total Social Finance rose.
And the UK jobs report shows unemployment near 43-year lows and wages up to 2008 levels suggesting the BOE has less room to deal with Brexit no-deal scenarios.
The bounce in the German ZEW was a surprise but the erosion of current conditions troubles and the improvement in outlooks remains below long-term averages.
This puts the euro/U.S. dollar (EUR/USD) into focus today in the G10 and the INR in the EM world as politics remain in play everywhere. This mood swing won’t last unless we see a 1.1440 melt-up.
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