Former trader Richard Breslow is out with his latest daily missive and if nothing else, it’s useful in terms of helping everyone keep perspective.
Basically, Richard wants you to focus on the data but as he correctly acknowledges, “numbers have more and more immediate effect with little lasting impact.”
That’s a symptom of a world where central banks are in constant communication with markets. There’s no utility in forming a long-term view on anything and that, in turn, is one of the main reasons why vol. can’t sustain a bid and why risk premia continue to compress.
Breslow also suggests that the Fed Chair announcement isn’t as consequential in the near-term as it seems, but the one thing we would add there is that by choosing Powell (which he probably will), Trump is ensuring that the communication loop which keeps vol. suppressed will remain firmly entrenched. If he were to up and choose Taylor, the market might well puke.
In any event, on the off chance you’re inclined to care more about the data than about Mueller and Powell, here’s a piece you’ll like…
It’s a week chock-a-block with news and events we would ordinarily be feverishly dissecting. Three major central bank meetings and no shortage of inflation data. Did I mention non-farm payrolls in the U.S. and China PMIs? And virtually no one cares. Running neck and neck for pride of place in the morning meetings is the identity of the next Fed Chair and who is likeliest to have been indicted by the Independent Prosecutor. And that really is a shame.