Friday, June 27, 2014

Friday Night Lights

We've been in and out all week, pleasantly preoccupied helping our future Hall of Famers make their way through a few rounds of playoffs, in the great American pastime that is Little League. And while Williamsport doesn't appear to be in the offing this year, good times and great lessons were had by all.

Some notes from the bench:

  • The US dollar index is firmly on the backside of the bear market rally that was sparked by Draghi last month. With inflation expectations starting to find a quorum in the US, the deflationary quagmire that Draghi is attempting to address appears to be boxed in by the considerable limitations of the severely flawed currency union - on the opposite side of the dollar exchange. As the songs goes, one man's ceiling is another man's floor.
  • Both the dollar and 10-year yields continue to converge lower after traveling circuitous paths from their divergent pivots in 2011 (see explanation Here). We expect both trends to continue and help stoke the burgeoning reflationary moves in commodities and those assets, currencies and indices closest associated with such strength.