“The only thing it will accomplish is forcing, as well as encouraging, investors to carry on with the types of trades every right-minded observer thinks has a large element of recklessness.”
All told, the mood remains “risk-on.”
“For now, nothing can go wrong. And if you needed any proof that central bank policy is the ultimate driver of these markets, here you have it.”
The message is loud and fucking clear: the vol. seller’s/ carry trader’s paradise and the risk party that’s made every homegamer with some SPY and QQQ look like a guru for the past eight years depends on DM central bankers staying some modicum of dovish. And on that score, bad data helps.
“But it is not true that the Fed is hiking to address vulnerabilities in the financial system or “pop” asset bubbles.”
“And now? Dovish Fed speak, wavering ECB leaks, resolute BOJ actions, completely mixed emotions from the BOE and suddenly it doesn’t feel nearly as fun.”
So yeah, “carry” on – but just remember that “what goes up”….
“This Fed transparency has become more of a liability than an asset. Instead of providing policy clarity, it creates confusion as various factions of the Federal Reserve board debate their positions in a public forum.’
Well, the message from Yellen was heard loud and clear and amusingly, so was the message from Stephen Poloz. In fact, you’d be forgiven for thinking they coordinated to make sure one offset the other. The BoC hiked, as expected, but “expected” is a relative term here. Because the whole abrupt shift in rhetoric that culminated…
“I’d settle for here’s what were going to do because it’s the right thing to do. And we’ll deal with what comes if necessary, that’s how we roll.”
“I see roughly equal odds that the U.S. economy’s performance will be somewhat stronger or somewhat less strong than we currently project.”
Well, the overnight session was described as “listless” by at least one Asia-based trader as markets are i) laser focused on Yellen’s testimony and ii) anxiously waiting for the Bank of Canada to see if the “hawks take flight”, as it were. “Asian currencies are trading listless ahead of Yellen’s testimony,” Andy Ji, a Singapore-based…
“I’m also outraged.”
Ok, well this should be an interesting week. We’ll get the BoC, which will make Bloomberg’s Luke Kawa happy because it means Canada will be in the spotlight for once. He’s got some fun Canada-themed socks we imagine he might wear on Wednesday. “The recent avalanche of hawkish messages from the BoC, as well as…
Earlier this morning, we said the following about a series of comments from Mario Draghi that sent the euro and bund yields surging: So for one thing, it probably wasn’t a great idea to open with something like “I’m going to sum up what I think in three messages,” because that doesn’t leave a whole…