Front running for the week
Euro area - Wednesday CPI reports, followed by ECB bulletin on Thursday and Euro group meeting where Greece will be a hot topic.
US - Empire state on Monday, and capacity utilization, followed by FOMC 16-17. Thursday CPI from BLS as well as Philly Fed.
UK - PPI and RPI on Tuesday, followed by MoM of BoE and labor data on Wednesday and retail sales on Thursday.
Japan - BOJ on 17
Overall, there is enough data points to keep the vol machine churning. UK core CPI has been running below survey expectation for a full year now. So upside will be something to watch out for. Also, in EU the core CPI is much more volatile than US and UK. Last print was spectacular, and looks like we may be in for some corrections downwards. And Fed is expected to reiterate the data driven policy.
Technically, Euro rates, esp 10y does look oversold, and so is SEK rates. A bad CPI print of euro zone will lead to a correction. However, not to the levels seen in April perhaps. And seems overall the GBP rates are trading rich compared to Euro and USD, which not in complete sync with USD/GBP. So is the case for vols, where EUR looks a tad too pricey compared to sterling (and even dollar). Although recent data has not been particularly strong from the Queen's land.
On the equities side, last week has been soft. VIX remains around 3 points above the 5 year low. The recent vols in FX and rates has failed to budge any excitement in Equities.
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