Investors are bargain-hunting again today, looking for those babies were thrown out with the bath water last week after the Brexit vote. I continue to use the U.S. 10-yr as a barometer of flight-to-safety trading. It is currently 1.467% +1.1bp. In my opinion, anything below 1.70% is a seriously depressed yield.
The EU leaders' summit has extended into Wednesday without UK PM Cameron. He was not invited to today's session where leaders are discussing what to do about the expected UK departure from the EU. EU President Juncker continues to push for an early departure, but no one seems to be paying him much mind.
This is an active week for U.S. data which concludes with the long Independence Day weekend. Next week will see the critical June U.S. employment data. Today sees Personal Income, the PCE deflator (the top Fed inflation target), Pending Homes Sales and latest Weekly Crude Supplies.
John M. Bland, MBA co-founder Global-View.com
Livingston nh 21:16:14 GMT - 06/28/2016
I think folks are overestimating how long it takes Brexit works thru the various markets (these are folks that guessed wrong) - the Fed may want to focus on the wonky natural rate BUT the 10 yr and shorter are all below the current "preferred rate of inflation" - this is abnormal and destructive -- inflation, not employment, is the RISK for the FED
AND just wait until the Trumpkins turn on the spotlight
GVI Trading Room john 20:49:08 GMT - 06/28/2016
Market Sentiment Indicators
Flight To Safety premium steady
The Fed Funds Market Sentiment Barometer reflects current sentiment about a future change in Fed policy. Odds for one rate hike by yearend are -11% (= rate cut) from -11% late Monday.
WIDE DIVERGENCE remains as Brexit fallout remains in play. 11% odds now on one rate CUT by year end.
GVI Trading Room john 20:00:26 GMT - 06/28/2016
Trading Themes --
The EU leaders' summit on Tuesday will extend into Wednesday without UK PM Cameron. He was not invited to the Wednesday session where leaders will discuss what to do about the expected UK departure from the EU. So far public comments have not been conciliatory.
Tueday saw an expected small upward revision to 1Q16 U.S. GDP data. A much stronger than expected Conference Board Survey was released, but it was ignored by traders beccuse it predated the Brexit market turmoil.
This is a fairly active week for U.S. data which concludes with the long Independence Day weekend. Next week will see the critical June U.S. employment data.
Markets are figuring out what to do now. Key financial markets are vulnerable with equities, the GBP and EUR trading weak. Prices in safe-haven sovereign debt markets continue to rise. Some are talking about "twin parities" in EURUSD and the GBPUSD.
John M. Bland, MBA co-founder Global-View.com
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Mon 27 May 2019 AAGB/US- Holiday Tue 28 May 2019 A 14:00 US- Consumer Confidence C 13:00 US- Case-Shiller Wed 29 May 2019 A 08:55 DE- Employment AA 18:00 US- BOC Decision A 18:30 US- EIA Crude Thu 30 Mar 2019 AAEZ/CH- Holiday A 12:30 US- Weekly Jobless Fri 31 Mar 2019 AA 10:00 EZ- Flash HICP A 12:30 US- Personal Income, Spending, Deflator AA 14:00 US- Final Univ of Michigan
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