By Michael Every of Rabobank
Black Sea, Red Sea… spot the pattern?
Markets focused on the US JOLTS labour data yesterday… because it was weaker than expected. It’s a questionable series that few have ever taken seriously, but if it’s moving in the right direction for lower bond yields and (if not on the day, surely soon) higher asset prices, then let’s look! However, as the Financial Times ran beneath their main headline about job openings being the lowest in over two years: ‘the jobs market is still tight. And bitcoin is booming again.’ Indeed, as the FT’s Janan Ganesh op-eds that ‘Voters don’t want to hear the fiscal truth’, it’s markets who don’t want to hear the macroeconomic truth. The US economy is not going to need generous rate-cuts in the near future when the ISM services survey is 52.7 and new orders are 55.5; such cuts will only be via a deep downturn that smashes equities and credit.
Markets also don’t want to hear the geopolitical truth as ‘Houthi attacks on vessels in Red Sea sound alarm for global trade’. Indeed, missile and drone fire at shipping –and the US Navy(!)– if continued, will see trade divert away from the Suez Canal round…
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