Rates higher as we wait for Fed minutes.  Clearly the short end of the US curve is more fearful of the Fed than the long end. 

The 2yr note has moved 16bps off the bottom.  Another break here takes us to challenge the level that is where we were when the Fed was primed and ready to roll in March ( or so we thought).

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US banks ripping at the curve gets some support from this Fed expectation.  US banks are cheap if you believe historical earnings multiples.  But are they going to earn out? The best combination of diversified fee income, and balance sheet is clearly $JPM, meanwhile if credit quality moves sideways and the economy ticks up in second and third quarters as we expect you can be sure that banks can outperform.  Right now what people forget is that banks might be rallying from the improved economic conditions that the Fed is ready to acknowledge.


The US Dollar has moved quietly from very oversold to comfortably in a range that says more Fed.  The DXY is waiting on Fed minutes but think we are still playing in a range that we think doesn’t break higher but could break lower…still hasn’t broken above the 50dma as we write.  Watch: Yuan near 2m lows and every move higher in the USD puts more pressure on China to devalue.  Markets at least will take this view…

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Aussie near a bounce but how much bounce is the question after 29 days and almost 7% lower….72 has proven to be major point for the AUD.  It was clear the Aussie needed to come back to earth after a 14.5% sure off the bottom. 

 

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