MT GLOBAL MARKETS Momentum Weekly recap wk26 as of 28Jun19 - PFLUGPOST thread 1/n

• mixed week, but EoM EoQ EoHY reshuffling, window dressing RiskOn momentum continues overall as Creditspreads tighter, US stocks breadth better, Vola below avg and big hope priced in for FED cuts

2/n Global Markets performance MoM June 2019

• ~90% of global stocks green
• all US sectors green
• US$ retreated (ahead of FED cuts)
• Govt bonds soared in disinflation
• Credits tighter
• weak US$ helped commodities

3/n Global Markets YTD

• Global Risk rallied on verbal global dovish central banks
• Global bonds rallied on global slowdown

4/n Global markets overview WoW , MoM, YTD, YoY

5/n Global 10Y Govt Bond heatmap as of wk26

• new 52wk low in 21 countries I am tracking... global disinflation / slowdown

6/n Global CB 2Y 10Y Yieldcurves overview

• the bond markets tell a clear language, let's see what next week Global M.PMIs business owners think

7/n Global FX markets W/W M/M momentum

• FED cut hopes is pushing US$ weaker, NZD/AUD/CAD ...outperforming with some commodities , rebounding riskreversals and yielddifferentials, not due to inherent country's economic strength...
• FX RiskOn = AUDJPY

8/n Global Markets Momentum / Trend / Exhaustion as of wk26

• strongest momentum and trend is still in the bond sector , but a lot of them are also technically overbought

9/n last week Chicago PMI came in much weaker than (some) expected...

• 49.7 (54.2) = 3Y low
• after weak other regional surveys, ISM and MarkIt PMIs probably come weaker too, hence will continue the #GlobalSlowDown and FED cut hope (despite "other data" wouldn't need cuts)

10/n next week monthly business confidence surveys will tell if there has been any bottom sighting , but the stock market play cheaper money anyways... so

11/n cycle perspective US ISM YoY vs US5Y-FF differential

• next week ISM will most likely weaken further (as regional surveys suggest)
• and catching down to what the yield curve has been doing
• this is the 5th time in the last 4 decades 5Y-FF is so inverted

12/n update on the US swapcurves vs SPX YoY

• stocks continue to go higher as they did in 1998/2000, 2006/2008. This is just a cycle warning and usually diverges 12-18M ahead. (stocks are not the economy)...

13/n one of <the> most useful Risk Gauges for some = Credit spreads and implied Stock vola

• VIX is not complacent, just a little elevated but also below long term avg
• and Credits are RiskON, < 52wk sma and tighter YoY

14/n ...US stock market breadth has also not bearish. All indices SPX, OEX, NDX, NYA had improved data

15/n NYA advanced/decline has not rolled over, no divergence, but making new highs. usually not bearish

16/n EURUSD & AUDUSD

• good example for FX pairs rebounding on several factors: Risk appetite, short cover, yield differentials momentum and RIskReverals momentum.
• but why ? only on FED rate cut expectations. ECB, RBA dovish too and weak economies. = ST US$ weakness play

17/end that's it.

enjoy the rest of the heatwave, drink tons of water.

happy Sunday xx