WHAT DO I THINK HERE? What’s the pain trade going into Yellen & what can shake the “consensus trades” we all know about which gave some players great start to year? The former reminds me a lot of the sentiment before her HH testimony. Majority would p
Written on March 16, 2015 by ozan
WHAT DO I THINK HERE? What’s the pain trade going into Yellen & what can shake the “consensus trades” we all know about which gave some players great start to year? The former reminds me a lot of the sentiment before her HH testimony. Majority would probably “want” hawkish Yellen beyond “patience drop,” for long USD to continue to work & for their frustration from last week on short US rates to heal. Hence, the pain trade is either patience staying or Yellen coming out very dovish post dropping the word as expected. Long European/Japan equity, short euro is a huge consensus & some hope Grexit fears could shake the former. Oil continues its sharp fall. I personally predict an “Iran deal” & that would further push oil down. Where’s Putin? Still not answered properly. Draghi speaks tonight; we observe profit taking on short Euro beforehand. Bund also starts the week choppy and weaker, but long end of Periphery bonds continue to be very well bid thanks to QE phenomenon. On the two “famous” EM benchmarks, huge protests over the weekend “against” Dilma may take its toll on BRL at open. And even though TRY opens calmer, President’s advisers again claim to press that they were “nor really satisfied” with the Basci meeting last week. The key short term focus into Yellen is likely to be: How much can a strong USD hurt US growth? What will her emphasis be on this subject & the topic of DXY breaking records?
