GLOBAL MARKETS WEEKLY RECAP wk6 thread 1/n

good afternoon.

• first attempt of a RiskOFF week since a long while
• dovish outlook from RBA, continued with BoE, ECB, but the almighty FED pulled the unexpected joker out of their sleeve which resulted in a late Friday reverse

2/n Global Markets overview

• ... to bring weekly momentum and longer term trends into context... and to get a visual for correlations.

• strong V shape global rebound since Dec Powell put got a little exhausted, some chips off the table last week.

3/n Global Markets YTD

• obviously a very strong start into 2019 after the disaster Q4 2018. But calculating these on an annual basis, it's most likely not sustainable. Hence, some weakness last week. (if not resuming to the bigger picture, but I will come to this later)

4/n Trends & Exhaustions

• some trendless markets, e.g. SPX , but the focus should be on yields...

• this global bond market rally continues, and this is not really a great sign for stocks now, it reflects dis-inflationary outlook and/or rotation + dovish CB comments

• Vale

5/n FX matrix snapshot

• RBA and RBNZ will probably cut in 2019, dovish stance of Lowe put AUD under pressure across the board

• Turkish Lira still the best performer on the monthly picture

6/n Global 10Y Govt Bonds heatmap

• this global bond rally continues and new 52wk low are a clear signal what big boys think and expect from a) inflation b) CB actions.

7/n Global Interest Rates & Curves

• Yieldcurve flattening across the landscape

• Italy under a little stress again, driving flow into Bunds (now 9bp single digit)

• I mentioned Poland & Czech in previous weeklies, Czech has an inverted curve

8/n US Swap Yield Curve

• 5Y touching FF
• 5Y < 2Y, 10Y, 30Y
• not particularly equity bullish at this cycle stage

9/n US Govt Yield Curve

• 2Y and 5Y < FF

10/n CREDIT MARKET EU

• ITRAXX Corporates IG & HY as well as Financials Senior & Subs enjoyed a sharp "rally" (spread tightening),but now it's important to watch next moves.Either continue current larger trend or flatline.Given the Eurozone PMIs I dont expect new spread lows

11/n CREDITS US 1of3

• key moments, reverse to larger trend or not , super key

12/n CREDITS US 2/3

... ditto

13/n US Credits 3/3

... ditto

14/n CDX vs SPX model

unchanged in amber territory

15/n RiskOnOff Chart Monitor

• larger trend is generally negative for stocks

• some touching downsloping SMA and partly started to reverse = first signs

16/n US Yieldcurve vs VIX update

• this could be a temporary calm before stress will continue, we are nevertheless in a late part of the cycle, the question is how long can global CBs stretch the stretcher ??

17/n US Dashboard update

• The global picture is clear, hence more and more CB's start ALREADY (being still in NIRP,ZIRP, LIRP!!) talking dovish.

• Momentum Dec-now had been V-shape

• now starts to falter slightly

18/n reminder status quo US cycle

19/n $SPX vs US yieldcurve

• while there has been a small downleg this week and a new dovish FED comment to witness a late rebound on Friday, overall, the bond market did not mirror the last part of the SPX rally...

20/n SPX vs US Bondyields

...same chart but now with outright yields

21/n US10Y vs sample other global 10Y

• I could have chosen nearly any country... here, I used Australia and NewZealand, ...this huge bond market rally continues for a reason... expected disinflation, dovish global CB all over again.

22/n $SPX vs sample RiskOnOff ratios

• a few of these indicators started to point lower... always worth to notice.

23/n Crude Oil vs inflation outlook

• Global economic is slowing (old news)
• some industrial commodities had been falling (old news)
• disinflationary outlook (old news)
• global central banks RE-dovish

24/n EUROPE alarming

• Euro area PMIs falling sharply since a long time, Italy, Germany sliding into recession

• flight to safe haven Bunds, driving them into 9 bloody bp.

• while Yield differential DE-US points higher,the other message is economic recession = ECB no hike

25/n BREXIT Cable quo vadis

• while the same "pointing up" yield differentials show up between Great Britain and the US, this is all about risk of hard or soft exit. Balance of trade between Germany, France, etc to UK is a huge one-way-street, does Brussels not talk to CEOs ?

26/n Turkey USDTRY vs TR10Y

• a broken record on my timeline, I know...

• local elections coming up, but all negative data is known, priced in.Risk is a much much stronger USD, which is always a catapult for heavy US$ funded countries. Oh,did Turkey just issued a €EUR bond?

27/n NatGas

• last but not least for this weeks recap...

• rollercoaster due to ...yes, a classic short squeeze of big players knowing some small guys position.

oops...I accidentally attached the wrong chart yesterday. here is the correct one. my bad. ;-) x