Markets Indecisive As Policy Bonanza Concludes

WHERE WE STAND – Short & sweet this morning, as another tumultuous week draws to a close.

Yesterday proved a choppy day, with sentiment a little soft on the whole, as stocks gave up the bulk of their post-FOMC gains, while haven demand saw Treasuries advance across the curve, and interestingly put a bid into the buck, in a change from recent dynamics.

It must be said that there wasn’t an fresh fundamental catalysts to trigger this latest bout of choppiness, though with uncertainty over the economic outlook remaining at ludicrously high levels, and the threat of Trump tape bombs lurking round the next corner, it’s no surprise that participants remain in no mood to hold exposures to riskier assets for any length of time.

As such, I remain a rally seller in the equity complex, while also favouring further upside for Treasuries, particularly with a slower pace of QT also set to provide a helping hand. I would, though, fade this recent bout of dollar strength, particularly with the idea of US exceptionalism now stone dead, and with the buck being the most exposed of all to the to-and-fro over tariffs. Selling the greenback here, targeting a move towards 1.10 in the EUR, and 1.30 in the quid, seems reasonable.

In terms of other bits and bobs on Thursday, both the Swiss National Bank and the Riksbank indicated that their respective easing cycles have now come to an end, though the former duly delivered the expected 25bp cut to 0.25% before doing so. Meanwhile, on Threadneedle Street, the ‘Old Lady’ held Bank Rate steady at 4.50%, in an 8-1 vote, delivering possibly the dullest decision possible, that gives me no reason whatsoever to shift my base cuts of quarterly cuts, in conjunction with updated forecasts, from here on in.

Besides all that, I do get the feeling that markets are waiting for a bit of a catalyst here. Clearly, tariff jitters remain as we move towards the 2^nd April reciprocal levies announcement, with uncertainty on that front only likely to ramp up before then. Furthermore, the data docket becomes rather quiet over the next week or so, meaning growth worries are unlikely to be put to bed any time soon. Consequently, this risk-averse meandering seems like it will continue for some time to come.

LOOK AHEAD – A quiet docket to round out the week, with it almost being time to toast the weekend with a beverage!

Before that, though, participants may at least glance over the latest Canadian retail sales and eurozone consumer confidence metrics, though neither is likely to be especially market-moving.

It’s also worth bearing in mind that today marks the end of the FOMC’s blackout period, while also being ‘Quadruple Witching’ as US index futures and options, plus single stock options, all expire.