As SocGen's Kit Juckes noted earlier in the week, "The ECB, not The Fed, is in the driving seat," and nowhere is that more optically obvious than in the massive divergence between US-EU bond risk premia and US-EU inflation surprises.
The following article by David Haggith was published on The Great Recession Blog:
The following is not simply a list of negative risks to the economy but a list of of serious economic conditions that are already placing drought-like pressures on the overall economy. This list doesn’t include the long-term structural problems with the economy, such as its high debt burden, but just the forces that have risen against it this year.
It appears the Fed's balance sheet "trial balloons" using primary dealers as intermediaries have begun.
A "prudent" Fed (and China's "National Team") have spurred a risk-on rally, as RBC's head of cross-asset strategy Charlie McElligott notes the market's 'Pavolovian' response to Fed's 'dovish hints' contained within the Minutes - despite simultaneously staying ‘on message’ with hiking / tapering commentary - prompts a "QE of old" response: stocks and Treasuries bid, while the USD faded.
China further perpetuates the ‘risk rally’ via apparent market interventions:
Authored by Brandon Smith via Alt-Market.com,
Last week was a rather crazy one for the news feeds, with cyber attacks and “Comey memos” and a host of other wild mayhem, it may have been difficult for many people to keep track of it all. That said, there was one event that I think went partly under the radar, and I think it is an important signal for anyone concerned with the ongoing process of economic collapse in the U.S.