It’s Quiet Out There: G-20 Leaves Markets Feeling “Damp And Grey”

It feels quiet out there.

Maybe a little too quiet.

There’s plenty of G-20 banter about the US/Trump having “won” at the weekend gathering in Germany. In this context, “winning” means successfully getting the “resist all forms of protectionism” language removed from the communique.

Remember, in Trump/Navarro make-believe land, free trade is a bad thing, so telling everyone to “shut the f*ck up while we choke off the flow of global goods and services” counts as a victory. Are you “tired of winning yet”? Don’t forget, y/y growth in global trade is already below y/y growth in global output. So things weren’t exactly humming along before Trump and Navarro took the reins in Washington.

The meeting had a kind of “unfinished business” feel too it, and that’s bleeding over into volumes on Monday. “The greenback extended its recent decline, with the Bloomberg Dollar Spot Index touching its lowest level since November, pressured by investors who kept the latest bearish trend intact,” Bloomberg wrote this morning, adding the following color with regard to the above-mentioned G-20 meeting:

A Japanese holiday and a rather uneventful Group-of-20 meeting that left most business unfinished suppressed flows in the major currencies; dropping a reference from the G-20 statement to resist trade protectionism weighed on the dollar, with macro and leveraged accounts adding to shorts positions, according to a London-based trader who asked not to be identified as he isn’t authorized to speak publicly. Volumes were near the lowest they have been in March, a Europe-based trader noted.

I think perhaps SocGen sums things up the best:

If there’s a single straw that dollar bulls can clutch on to, it’s that 10year Note yields are still at 2.5% and the speculative short position, as reported by the CFTC, has halved. But sentiment towards the dollar has deteriorated significantly, and the weekend news that the US effectively forced the G20 to drop its commitment to fighting protectionism, has produced a morning market mood to match the weather — damp and grey.

Any questions?

Meanwhile, Bloomberg also notes that France’s first televised election debate is this evening, which means you should “expect the polls in the coming days to carry greater weight, as they may signal shifting support following the debate.” So that should make for all kinds of fun in OATs later this week. Here’s the latest in terms of odds:

Crude’s lower following the latest rig count data which (of course) showed oil rigs rising by 14 to the highest total (631) since September 2015. The bulls are still grasping at production cut extension straws. “One of the key drivers will be speculation over whether OPEC will extend its output cut agreement,” Ric Spooner, chief market analyst at CMC Markets in Sydney said. “It is a significant factor for markets and if it’s not rolled over it could be quite a bearish development.” Thanks, Ric.

Japan is closed for a holiday, while in China, home prices rose last month in more cities despite increased restrictions on property transactions by local authorities. Summing up, Bloomberg notes that “new home prices, excluding subsidized housing, gained in February in 56 out of 70 cities tracked by the government, compared with 45 in January, the National Bureau of Statistics said Saturday.”

Here’s a snapshot of overseas markets: