I suppose we'll be looking at inflation now. This data suggests we're getting a little creep in inflation, but not enough to shake the Fed's thinking at all. |
If there was a surprise (in the GDP report), it was that the deflator and core PCE were revised up a bit. So, slightly slower growth than expected, although it's still a relatively robust 4.1 percent. |
It's very expensive to bet against the carry trade. |
Nothing will move the market dramatically until the payroll data comes out. |
On the one hand you've got electoral uncertainty in Germany, and on the other you're going to get a raise in (U.S.) rates tomorrow. It would be surprising if the dollar didn't strengthen today. |
People are still willing to buy U.S. debt. There is still a search for yield. |
Slightly higher inflation says to the Fed they have to remain with a tightening bias. The market is going to remain focused on payrolls at the end of the week. That's likely what is driving dollar strength. |
The currency markets are much more driven by activity and data coming out of Europe and Japan right now. |
The trade deficit will eventually be a factor in weakening the dollar. |
There's demand for these bonds from somebody who needs duration. The economic backdrop would suggest that buying 30-year Treasuries at 4.47 would end up being a painful trade. |
We continue to see strength in the Canadian dollar. Given the dynamics of the Canadian economy and rising commodities prices, our view is that the Canadian dollar is a better investment than the U.S. dollar. |
When you look at valuation problems at U.S. stocks and the stronger euro and worry about European companies, there is a good investor bias to continue to add to Asia exposure. |
You get the idea that the Fed's not quite done (raising rates). |