Pre-FOMC Tap Dance

Published 10/29/2019, 08:53 AM
Updated 07/09/2023, 06:31 AM
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JP10YT=XX
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Not unexpectedly the market has been going through its usual pre FOMC position tap dance despite the rate cut all but assured. Whether you buy into it or not the whole idea of a mini reflation trade coupled with more positive headlines on US-China trade, continues to propel risk markets forward. While the economic data, overall has remained dreadfully weak, equity markets seem to be in Teflon mode. Riding the trend is your friend mini-wave of a reflationary risk revival.

Oil

There's a recycling of comments by Russian officials that appears to call into question the need for additional OPEC+ cuts. Still, it sounds as if this has more to do with appeasing Russian oil Barons who despise giving up market share to the US.

On the flip side there the expected OPEC pre-December meeting jawbone as Nigeria oil minister suggest Saudi Arabia is ready to agree to deeper production cuts. The headline ping pong had started much earlier than usual and to be honest when I woke up in my usual 4 AM fog this morning, and after reading the Oil headlines, I thought it was November 29, not October 29(not kidding)

Gold

Gold is feeling the inescapable weight of rising global bond yields. Yield in Japanese 10-Year bonds hit the highest since Jun, Australian, 10-Year yield, jumped nine basis points and China bond market continues selling off on the lack of Pboc stimulus all following in the wake of surging US and German bond yields over the past few days.

The fact is Gold, and higher bond yields can't mutually co-exist in any beneficial way for Gold prices.

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