Read on the Trading Floor - 17 June 2024

Today’s focus… Le Pen tries to settle the mkt's nerves.

Macro Themes At Play

Theme 1 - Tumbleweed

Theme 2 - Le Pen looks to soften the RN message to mkt's

What else is being read on harkster.com

Theme 1 - Tumbleweed

Empty economic calendar, 3^rd week of the month notorious for lack of activity, European assets enter a period of stabilisation, US markets are closed on Wednesday for Juneteenth holiday, liquidity is coming in July and buybacks continue. As a result, 60/40 portfolios continue to perform as nothing stands in the way of the AI juggernaut and duration is in demand, settling at 2month lows. We've a wave of speakers from the ECB and Fed, but the data matters more than what they're saying... No data, lower vol, higher we go.. 

• Steno Research - Get ready for a WAVE of liquidity in July!

• The Lead-lag Report - The Reckoning

• UBS CIO Strategy Snapshot - Connecting other dots

• The Market Mosaic - Earnings growth needs to take the bull market baton

• TKer by Sam Ro - The bottom line is looking up for stocks

• Ashmore - Lower inflation is the signal, random dots on a chart is noise

Source: Tradingeconomics.com

Theme 2 - Le Pen looks to soften the RN message to mkt's

After the worst week since 1990 for 10-year spreads, French fixed income has found a new clearing rate, with the OAT-Bund yield spread remaining elevated around 75bps. As is so often the case, an aggressively left (or right) leaning campaign agenda (See Meloni in Italy), comes back to the centre on policies once in power. Over the past 24/48hrs Le Pen has appeared to soothe investors' fears. In particular she "won’t try to push out Macron if she wins the election". Actions speak louder than words and for now the mkt awaits the results of the first round of elections on June 30th.

Lagarde and Lane both had scheduled speeches today, with ECB's Chief Eco Lane making it very clear that the current situation "is not disorderly". One needs to "distinguish between markets repricing fundamentals and disorderly dynamics"

• ING - FX Talking: Politics vs Policy

• FX Poetry - Trussed

• Bloomberg - Volatile French Markets Attempt to Digest Le Pen’s Reassurances

• ZeroHedge - French Markets Stabilize After Le Pen Says She'll Work With Macron In Appeal To French Moderates

• Fed Guy - French Connection

• Bloomberg - Lagarde Says ECB Is Watching Markets After French Turbulence

• FT - From France to America, the far right is on the march

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