Originally published by AxiTrader
It's the data stupid.
I know this is my hobby horse since the start of the Trumponomics rally but the moves in the S&P 500, US bonds, and the US dollar can again be explained by what's going on with US data at the moment.
While certainly there is again a heightened level of risk aversion gripping markets which is facilitating these moves across the above and global asset classes it's the data that is the key once again.
To reiterate. The Trumponomics rally in stocks and risk assets was coincident with a change in the data flow from the US, the G10, and emerging markets more broadly.
Put simply economic data just started printing so much better than expected that traders and investors the world over had to take notice.
And as I have been writing for a few weeks now that data flow - the better than expected prints - has slowed across the globe. But it has positively collapsed in the United States where the Citibank Economic Surprise Index dropped from 38 last week to just 6 this morning.
Such is the mean reverting nature of these indexes.
But as the moves lower in the Atlanta Fed's guesstimates of Q1 GDP growth (which is now down at just 0.5% from more than 2.5% expected in the middle of February) the data has been slipping.
So I offer you this chart which shows the Citi US economic surprise index versus the S&P 500, US 10 year bonds, and the US dollar index. It shows the run higher and the current fall.
It all suggests this recent risk-off tone is not finished yet.
Have a great day's trading.