Hold on a minute

sotu-14-02

Hold on a minute.

Wednesday we expect to see some policy statements from Mr Trump and hopefully those policy statements will take place as a press conference with questions and not a tweet of 140 characters. The markets will then take guidance from what is said and what seems possible.

With the imminent release of Policies markets took a breather. Equities were down a little, bonds traded slightly better and commodities generally were weaker with Brent falling about 2%. Gas was down 12% on the belief that winters chills will be lessened somewhat with the weather in the North East set to rise into the low teens up from sub-zero conditions.  Iron ore futures were up due to demand from Chinese investors. The $24 billion three year note auction was well bid with a bid to cover ratio of almost 3. The yield was 1.472% “the highest for an auction of the maturity since 2010”( source Bloomberg). The ten year closed about 2.38%.

The question that markets will be looking for will be how Trump will beat a 2% donkey into a 4% racehorse. The target for Trump has to be to raise productivity and with immigration off the table the best the Government can do is create the environment where productivity can be raised.

The Dollar was  slightly stronger and the pound retreated as Brexit fears continue to rise.

Aussie Market Today.

The US market was steady ahead of Trump’s expected policy releases tomorrow. I expect the Aussie market to be quiet ahead of any market movements tomorrow. The equity market could be a little stronger as iron ore was better bid suggesting a stronger Aussie Dollar and buying of Resource companies.

Bonds will be steady with little overseas direction. Take a note on Gross’s comments as bond markets could be in for a trashing should markets feel that Trump can arc up the economy leading to a higher overall level of interest rates.

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