Seasonality; Shift in Calendars!
There is a saying: Sell in May & go away and don’t come back until St. Leger Day (mid-Sept) - these days, the end point is Oct 31, tied to April 30 through Halloween being calendar’s weakest rolling 6-month stretch.
Simple rational thought is that Calendars can't predict markets- Even if seasonality ever worked, it should obviously get priced in that it would stop. People might get out in April to front-run Sell in May
FOMC begins today - it’s obvious that Fed policy has not been restrictive while US fiscal policy continues to be reckless and as a result, Inflation is persistent. The new piece of illegal emigration seems to have multi-dimensional impacts on the economy - 10-year yield to continue towards 5%.
Tomorrow, U.S. Treasury will publish -what for years an obscure announcement - that in an era of high debt and higher rates, has assumed increasing relevance. Yellen would mix the maturity and strive to keep long rates from rising- futile attempt as the markets have grown wiser (at the end of Q2 2023, the average maturity of US marketable debt was 74 months & now it's at 70 months)
EUR upside fades - German CPI came in at 2.4% tad higher. Today, inflation data from the rest of the EZ together with GDP data for 1Q24. 1.0695 break to signal that this corrective up move is over.
China's Caixin Mfg PMI rose to 51.4 in April,
Production expands at most pronounced pace since May 2023.Selling prices fell again despite highest cost inflation in six months.
News of BHP's £ 31 billion offer for Anglo lifted GBP - 1.2548 highest level since Apr 12 (1.2558 was high that day)- a close above 1.2548 signals some upside impetus.
Old timers used to believe rightly that BOJ would not intervene in Fx markets on Japan holidays - it used to be days when markets trade with gay abandon - however BOJ does not seem to enjoy their holiday any more or has chosen to adopt Work from home More crucial question is whether BOJ can hold USDJPY for long - Absolutely not - Unilateral intervention is useless without meaningful change in the underlying fundamentals and hence lesser the time USD/JPY stays down, greater the chances of 170. For now, 155- 160