Morning 6-19

Follow Up to yesterday’s ECB excitement From Reuters;

However, conversations with six sources on the sidelines of the ECB’s annual symposium in Sintra, Portugal, showed that rate-setters had not expected such a strong message and that there was no consensus on the path ahead. The sources, who have direct knowledge of the situation, said the possibility of a rate cut or fresh asset buys had been mentioned last month only in passing and there had been no substantive discussion as the focus had been on a fresh package of loans.

News:

Boris Johnson Builds Lead in Race to Be UK Prime Minister- Johnson, a flamboyant former foreign secretary, won 126 of the 313 votes cast by Conservative lawmakers in their second-round of balloting….Johnson insists the U.K. must leave the bloc on the rescheduled date of Oct. 31 31, with or without a divorce deal to smooth the way-(ITC markets)

Government bonds are now the ‘most crowded’ market trade, more popular than technology stocks– latest Bank of America Merrill Lynch Fund Manager Survey….U.S. government bonds, cited by 27% of respondents, pushed the long-popular technology trade out of first place. Tech (26%) slid to second, followed by long U.S. dollar(18%) and short European stocks (9%).In terms of positioning, investors moved to cash at numbers not seen since the U.S. debt ceiling standoff eight years ago. They shed positions in global stocks to their lowest allocation since the financial crisis bottom in March 2009, and increased bond allocations to an overweight level not seen since September 2011.-(CNBC)

 Markets Show Treasuries off a bit, as Bunds come to their senses and sell off 60 ticks, Buxl -156 as markets got a bit ahead of themselves in pricing ECB rate cuts. treasuries drifting lower  as it would take something unexpectedly dovish  to push treasury yields lower, markets have priced in a dovish fed statement  so a  buy the rumor sell the news reaction could be forthcoming. Fed expected to lower economic Projections of GDP, Inflation, and Unemployment, adjust dot plot to no rate hikes this year or next and hint that that they are ready to act. Keep an Eye post Statement to see what Trump Will tweet‘s out. From What I read it will be next to impossible for Trump to get rid of Powell, he has threatened to demote him, which also may be tough to do. Yesterday’s optimistic tweet from Trump regarding Xi meeting  gives fed plenty of Cover to hold off on rate move today.

 Bonds down 12 ticks, Spoos, oil, Nasdaq, Dax all little changed as we await the fed decision. 23 % chance of a cut today so some lottery tickets still being played

Yesterday’s API oil data in line with expectations, a rocket attack against oil Facility in Iraq had little lasting impact.

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