Stocks traded nervously for the whole day on Friday and “were rallied” towards the close, ending 1.5% higher after an explosive last half hour. Bond yields ebbed back with 10 year yields falling 6-7bps for both US treasuries and Bunds with some notable underperformance seen in peripheral European markets. Not everything smelt exactly as rosy as the late rally may have led us to believe going into the week end amidst a further rise in the libor/ois spread which historically has heralded problems in credit markets. This time may be different and some argued that dollar pipeline strains have been building from dollar repatriation of corporates that are busy buying back their debt (corporates previously borrowed against their earnings hoarded abroad to fund buyback programs) but weakness was palpable in credit markets yesterday. We noted earlier this week that the Fed would not take too long before taking a more dovish stance and having B. Dudley talking about the possibility of more QE (https://www.zerohedge.com/news/2018-02-23/ppt-strikes-dudley-rosengren-qe-or-more-will-be-back-powell), one day after the Fed talked about excessive leverage and possible “serious” strains in labour conditions, was more than we expected. It accounted for a large part of the equity and bond rally yesterday and the feel good factor going into the week end caused by 1.5% late squeeze that replaced the pattern of failed rallies seen earlier this week. The dollar index climbed +0.3% but the dollar was mostly weaker against EM currencies. EM markets rallied strongly as well.
BentinPartner Advisers, Basel There is more to our research than the Daily Close, the Confidometer and our blog posts. To receive actionable content, a comprehensive wrap up every day and our tactical FX and global models positioning or if you wish to be notified 24/7 with updates on key macro economic releases and/or technical breaches on our comprehensive investment universe covering international equities, bonds, FX, precious metals and commodities, take a free trial to the Bentin Daily, our premium research service. We help you know when to run and when to sit by tracking all developing (or well established) trends and equally importantly by flagging market breakouts. You may join our free trial by clicking here. https://www.bentinpartners.ch/subscribe We are leaving no stone unturned. Important Disclaimer © Copyright by BentinPartner llc. This blog is not intended as a recommendation, an offer or solicitation for the purchase or sale of any security or underlying asset referenced herein or investment advice. Investors should seek financial advice regarding the suitability of any investment strategy based on their objectives, financial situation, investment horizon and particular needs. This blog does not include information tailored to any particular investor. It has been prepared without any regard to the specific investment objectives, financial situation or particular needs of any person who receives this report. Accordingly, the opinions discussed in this blog may not be suitable for all investors. You should not consider any of the content in this report as legal, tax or financial advice. The data and analysis contained herein are provided "as is" and without warranty of any kind. BentinPartner llc, its employees, or any third party shall not have any liability for any loss sustained by anyone who has relied on the information contained in any publication published by BentinPartner llc. The content and views expressed in this report represents the opinions of Marc Bentin and should not be construed as guarantee of performance with respect to any referenced sector. We remind you that past performance is not necessarily indicative of future results. Although BentinPartner llc believes the information and content included in this report have been obtained from sources considered reliable, no representation or warranty, express or implied, is provided in relation to the accuracy, completeness or reliability of such information. This blog is also not intended to be a complete statement or summary of the industries, markets or developments referred to in the blog.