"It's Deja Vu all over again !" Yogi Berra, 1925 - 2015

ref :- "Treasuries Finally Give In to Tech Turmoil" Bloomberg Markets Just one of many fine examples that sprang from the lips of that great malapropist and baseball icon Yogi Berra. We couldn't be 100% positive, but on balance we think it unlikely that Mr Berra had either the time or inclination to follow financial markets too closely, but the markets being what they are, the old "Deja Vu" line gets wheeled out quite a lot, inadvertently or otherwise. As we limp towards the long weekend and the end of the first quarter, some are wondering whether Treasury market action in 2018 might mirror that of 2017 closely enough to merit Yogi's call. *** Reminder to newcomers : bond prices and

Time to get our thoughts in order ? Fat chance .......

ref :- General Of all the prognostications for the year ahead made at the start of 2018 the one that inspired most confidence was that if nothing else, this year was going to be a fair bit more volatile than the recent past. Of course, at the most obvious level that would make things trickier for stock market investors in particular, used to what has seemed like an unbroken upward path in prices accompanied by an ability to shrug off events that in previous times would have provoked some serious jitters. Decent growth, healthy corporate earnings and plans for fiscal stimulus have sustained the long bull run, but it was an ultra-low interest rate policy and massive additions of liquidity

Some Pointers Today ..... Is it a dove ? Is it a hawk ? Actually, it's really more of the same

See :- "Powell lifts Fed rates ...." and "The day in the markets" , the Financial Times A 25 basis point rate hike, an unchanged prediction of two further hikes this year (many were expecting three more), but of another three in 2019 (from two) and a high mid-point in 2020 of 3.4% (from 3.1%). An uplift to growth forecasts and confidence that long-awaited upticks in inflation will filter through. Does that make Jay Powell's first monetary policy announcement as Fed Chairman a doveish or hawkish affair ? Keeping a target of three hikes for the whole of 2018 suggests the former, and that's the way the markets saw it (weaker dollar, bond yields lower). But the steeper path for rates further

The problem with the UK is that even good news comes with the Big Proviso....

ref :- "UK Wage Growth Accelerates, Signaling Squeeze Is Ending" , Bloomberg Markets As we've said (on Monday, was it?), most of the financial world's attention is firmly fixed on how the US Federal Reserve will adjust their forecasts for growth and interest rates in their statement later today. Given that a 1/4 point hike in rates is already fully discounted, investors will be forensically examining the language used in the statement for clues about future monetary policy, and judging the tone struck by new Chairman Jay Powell for any hawkish (or indeed doveish) bias. And frankly, there's not too much more to be said about that .... not till tomorrow, at least. We also said on Monday that t

It's only Monday, but already you'd think the Fed was the only game in town .....

Monday 19th March 2018 It's only Monday, but already you'd think the Fed was the only game in town ..... ref :- General Sterling watchers would probably beg to differ -- they've got Brexit developments, inflation data and the Bank of England to keep an eye on -- but in an otherwise quietish week in the economic calendar, the US Fed's Open Market Committee's meeting and rate decision on Wednesday stands out a mile. Not the decision itself, you understand ...... that might now be termed "a foregone conclusion" -- even though we're supposed to believe that there's no such thing in markets. We cannot find a single commentator who does NOT believe that the Fed will hike rates by 25 basis po

Mr Trump's new man may want a strong dollar, but the President's policies may not allow it .

ref :- "King Dollar Is Really Just a Grand Duke", James Mackintosh, Markets / Streetwise in the Wall Street Journal Of all the unprecedented features of the current US administration, the fantastically high turnover of personnel in key positions must rank as about the most extraordinary. The rumour mill has already moved onto the position of National Security Adviser Lt. Gen. H. R. McMaster and we haven't even had a chance to mention Larry Kudlow, the new Chief Economic Adviser to President Trump. Mr Kudlow has replaced Gary Cohn, who you may remember was forced to resign after failing to convince the President of the dangers of protectionist trade policies in general and slapping tariffs

"Goldilocks is Back!" and the Bears take a back seat ..... again

ref :- "Markets are not braced for the one narrative that counts" , John Authers' "The Long View" in the FT Weekend A week ago it was easy, had you wanted to, to list some pretty sound reasons why the pull-back in equity markets and the rise in bond yields over the past month or so were justified . Surely they were no more than an accurate reflection of the increased risks to markets that had been able to ignore potential threats for so long ? A jump in January's US Average Hourly Earnings number released in early Feb suggested that FINALLY some embryonic upward inflationary pressure was about to work its way into the system. That in turn prompted increased consideration of what had been a

"It's not that we're "National Stereotyping", it's all about policy .....

We're going to point you today to a longer-term issue concerning the European Central Bank. Most focus today will be on what ECB President Mario Draghi has to say after the ECB policy meeting, but by time most of you get to see this we'll have the answer to that one. Suffice to say, in the likely absence of any bold statements investors will be studying the nuances of the language used by SuperMario to discern whether the Eurozone's strong economic performance is finally pushing the ECB towards adopting a (slightly) more hawkish posture. A week ago one might well have thought that some suggestion of that was quite likely, but if anyone needed a handy reason to remain ultra-cautious of turnin

All-out War a real possibility as the last "grown-up" leaves the room ..... Trade war, tha

You can never be sure with Donald Trump. He certainly changed the nature of campaigning to get into the Oval office (and not necessarily in a good way), and one might have assumed that the nakedly vote-catching promises he made to secure the support of differing interest groups would be ditched once the election was won. Some of them have been too, either because of the difficulties of implementing them in the real world, or because the President's commitment to them may not have been quite so steadfast as he had implied. But you've got to give him his due ...... for all the early high-profile failures (e.g. healthcare), he's come through with his version of tax reform (whatever you think of

Back at last ...... but is the world a different place?

There's been an awful lot going on whilst we've been away for so long but have things really changed ? Well, maybe ..... the spike in average hourly earnings last month certainly suggested that meaningful inflation might finally be on the way and caused a long overdue correction (i.e. > 10%) in stocks. The Fed's preferred measure of inflation however still languishes at little more than 1.5%, so what are we to believe ? Friday's US employment data will be even more crucial than normal. The spectre of inflation at last meant that 10yr US Treasury yields were scared into a sharp upmove that tested the "crucial" 3.00% level , but have backed off to 2.80% (every level is "crucial" to someone i

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