Key News
· Key Reports (WSJ):
7:00a.m. MBA Refinancing Index. For Nov 10 Wk. Previous: +11%.
8:30a.m. Nov NY Fed Manufacturing Index. Expected: 17.00. Previous: 22.92.
2:00p.m. October FOMC Minutes.
Quotable
“All animals are equal, but some animals are more equal than others.”
George Orwell
FX Trading – Goldilocks lives
Lower inflation and a healthy consumer means Goldilocks lives…
The stock market liked yesterday’s retail sales and disinfllationary PPI number…
…while dealers in the FX market loved it! They whipsawed players out of long dollar positions on the headline retail sales number, even though underneath the number looked just fine once the impact of lower petrol spending was considered—which in effect means more money in Mr. US Consumer’s pocket.
An email from a friend of CC following yesterday’s retail sales and PPI number sums it up well:
“Inflation falls sharply.
“Fed on hold (I read that on the BSCC letter).
“So...US real interest vs Euro real rates are
(a) higher
(b) lower
(c) unchanged”
I’m going with (a), with an emphasis is on the world “real.”
As long as the “Fed on hold” view remains intact, the dollar looks relatively well supported by the US economy. Because you remember the old adage; higher 30-year bond prices equals a higher dollar (Well it’s not really an adage, I just made that up because of the comparison chart below):
US $ Index vs. 30-year T-bond Futures Prices Daily
A decoupling of late between 30-yr bond prices and the dollar as you can see—if the US dollar starts playing the catch up game, it could get interesting.
Jack Crooks
