Jan 27, 2017 - Market Update

Short review

• Trump/Mexico – 20% import tax mirrors the Trump’s view of doing serious business with Mexico
• Saw some position squaring ahead of next week FOMC and NFPs

• BoJ was active within 5-10 year bond space what helped USDJPY higher; this action came after announcement that BoJ will not act within shorter maturities space
• BoJ trying to manage the yield curve (yields around 0.1% level but the effect is translated into JPY moves only and not really affecting bond yields
• Is Kuroda testing the market?

• US equities in uptrend, supported also by strong earnings
• More EU names to report next week what will keep equity markets busy
• Microsoft doing well in cloud business

• Bit of consolidation in bonds
• Italian and Portuguese bonds having hard times what may be on the account of speculation/opinion clash about QE taper from ECB
• While ECB is pushing back any talks about QE taper, bond market is already pre-positioning for such a move
• Longer maturities are reacting, pushing Italian and Portuguese yields higher (where they may eventually trade without QE)
• Bund yields also heading higher thus lowering the spread with US Treasuries (very last picture bottom right)

• Theresa May meeting Trump today; more at  link
• Trump to speak with Putin on the phone tomorrow

Good luck Champs!

Mr Hawk

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