"...the current (ongoing) breakdown in the USD is representative / driving some short-term and nascent deleveraging of legacy ‘reflation’ trades as per the sudden-death of the central bank "policy divergence" story last week - which had been the primary Dollar bull-case driver over the past year..."
With the omnipotence of the world's central banks suddenly all too evidently exposed as nothing more than 'Oz'-like smoke-and-mirrors, it is not just US politicians that are losing faith and calling for more oversight of the most-powerful unelected officials in the world. Handelsblatt reports today that Germany's federal auditor says The ECB lacks accountability in banking sector oversight and government will work to close that oversight gap.
What remains of the accustomed standard of living in America is supported by wishing and fakery and all that is now coming to a climax as we steam full speed ahead into Murphy’s law: if something can go wrong, it will.
The key economic releases this week are the new home sales report on Thursday and the durable goods report on Friday. In addition, there are several scheduled speaking engagements by Fed officials this week, including a speech by Chair Yellen on Thursday.
The Fed tightens on Wednesday and bonds rally. What the hay? GaveKal, Jeff Gundlach, and Jim Bianco nailed it in that every spec and their mother are/were short 10-year Treasuries. But this is only a small part of the story: The global bond markets are broken. There are no signals, there is no noise. Trying to infer any sense of economic or financial information from bond yields is futile.
"In our view, for the cycle to last another several years, we want to see more of the same – a continued environment of ‘ok’ growth and low inflation, which allows central banks to keep the party going."
A quiet start to today's quad-witching St. Patrick's day, with European stocks mixed, Asian shares and U.S. index futures (-0.1%) little changed ahead of industrial production data with just Tiffany's set to report earnings.