DXY sagged last night as EUR bounced:
Australian dollar popped and dropped:
Base metals are hoping for China stimulus:
Big miners (NYSE:RIO) too:
EM stocks having a crack:
Junk yawn:
Treasuries backing up again, curve squashed:
Stocks only go up:
Basically, the Fed delivered a hawkish hold as expected. It also released its quarterly projections which suggest another two rate hikes:
Forex is still rerunning a mini-me version of the China reopening pattern:
- DXY sliding as the Fed slows and global growth is perceived as higher than the US;
- China stimulus helping it and Europe, lifting EUR;
- AUD up with commodities.
I have my doubts:
- The Fed is trying to kick one leg out and the higher markets go the more likely it will kick harder;
- Chinese stimulus is an all-or-nothing proposition given its liquidity traps, and
- Europe is heading for recession.
Beyond this short-term stuff, my base case is still a global recession, lower commodity prices and AUD.