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Silly season is back

Published April 5, 2019

We must be re-entering the silly season as US equities form a bull market as the DOW has now rallied 20% from its lows in October, to be once again just short of all-time highs at 26,828. The sell-off back then was fear related over US-CHINA and the pace of US rate rises… both fears have been diminished somewhat 6 months later however not resolved. It’s hard to tell if Trump is calling wolf as again overnight he has said there’s a “very good chance” of reaching a trade deal, and that “some of the toughest things have been agreed to. It’s a very — I’m using a word I don’t like using too often — it’s a very comprehensive deal.”

He also called the Chinese government “tough negotiators” but “great friends,” which as we all know of recent times his other meetings with “great friends” have not turned out so great. The other fear, US rate hikes, is diminished but not dead as US jobless claims overnight fell to a 49-year low. We now wait on tonight’s US payroll data with an expectation of 180k new jobs and an unemployment rate that is also hovering at 50-year lows. Another sign of the silly season are the moves in Bitcoin over the past week and the strange movements in the US yield curve (see chart).

AUD 0.7000/0.7200 continues, US payroll data tonight is the focus and keep an eye on AUDJPY as it grinds towards significant resistance at 80.00 as Mrs. Watanabe will be poised for action.

 

Bitcoin (yellow) and US 5 yr treasuries (red) – a wild ride Reuters