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It isn’t an easy environment for making predictions about where markets will be headed. The S&P 500 made a new year-to-date high Thursday, and bonds are rallying, too. The dollar is confounding its critics and is bid. According to the financial conditions indexes, it is time to bring out the checkbooks. Things must be very good indeed. Yet, it all feels terribly depressing.
The Fed’s downside surprise hasn’t been ameliorated in traders’ psyches by assurances that the economy is in a good place. People mostly came out of it wondering what the Committee now knows, rather than that they are exhibiting an abundance of caution. And speculation about just how much difficulty they suddenly perceive about the balance sheet run-off is rife. Put that down to mismanaged expectations about autopilots and watching paint dry.
Camp - Rest - World - News - Fed
And if you remain in the green-shoots camp about the rest of the world, the news from overseas since the Fed meeting isn’t going to reinforce optimism going into the weekend.
The national CPI miss out of Japan showed that the country is getting no closer in reaching its inflation target. When the core measure reached 1% last year, there was a lot of excitement. Not so much this year, as the numbers look moribund. Hoping that next week’s Tokyo CPI will paint a better picture is true and overly optimistic. And watching 10-year JGB yields print at their lowest level since October 2016, doesn’t exactly suggest fears of price pressures. Bring on the sales tax increase.
PMI - Data - Euro - Zone - Lovers
Far more disconcerting have been the just released PMI data from the euro zone. Lovers of the euro, courtesy of some economic surprise index, should figure in the misses from France, Germany and the bloc as a whole. I smiled when I heard someone say, the German and French numbers may have been...
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