Daily Note- New Reality

Future-of-team-work-645x285Summary:

  • Fed’s tortuous normalisation process
  • US financial conditions tightening
  • Strengthening Dollar

 

Good Morning,

The follow-through from the strong FOMC Minutes finally arrived on Tuesday and EUR/USD closed at the lowest since mid-March, which is good for our position.

The Fed’s normalisation process has been a tortuous on/off affair primarily because their focus has been almost entirely on not upsetting the financial markets rather than doing the right thing for the long-term health of the US economy. Who’s fault is that? Last week, the Federal Reserve machine cranked into action to persuade markets that they want to raise rates before the Summer and again before year end. So far, the reaction has been quite muted, but it is far from certain that this calm veneer will continue. Let’s dive in and think about what the Fed are doing and what this means for markets.

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GlobalMacro360 Daliy Note 25th May 2016-2

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