Given the fact that the majority of Europe takes August off, we are going to expect the financial markets to make to large of a move here. Not that everyone is off on holiday, but experience has taught us that this time frame is more left for two-way flows and chop. Not the ideal environment to get cute.
Furthermore given the continued partisan Washington tone in regards to new stimulus, we would suspect there are moves here that may not make much sense and Magnelibra would much rather let it’s program dictate flows within and we can tell you that it will take a significant move here to change the sentiments that are already prevailing.
There are a few moves that the Magnelibra Econemotions is watching:
Bonds to continue lower within a steepening structure, i.e. the front end outperforms the long end. Ideally the program is looking for a back up in the Ultra Bond toward 223/224 area to get long
The US Dollar has seemed to hit a stopping point vs FX outperformance. The program continues …
