Commentary:
Disinflation is likely to be a big driver of financial asset prices over the next few years. Furthermore, it is worth noting that several indicators suggest sentiment is not excessive, despite recent equity price action. Goldman Sachs tracks mutual fund flows, which in aggregate continue to show favoritism for fixed income:
BAML’s Fund manager survey also shows healthy cash levels:
Positioning in Japanese equities is high relative to recent history, but at the low range compared to the 2004-2005 period:
Separately, sentiment on commodities has not been this bearish since the post Lehman days:
Notable:
- US Empire Mfg declined to -1.43 vs +4 exp and 3.05 prev
- US NAHB Housing Mkt Index improved to 44 in May vs 43 exp and 42 prev
- UK Claimant Count Rate declined to 4.5% in Apr vs 4.6% exp and prev. Jobless Claims declined -7.3k vs -3k exp an d-7k prev
- EU GDP declined -1.0% in 1Q vs -0.9% exp and prev
- The BOJ announced 2 trillion of one-year liquidity on the back of the usual 800bn operation for Friday. An official told Reuters this is “a response to sharp rises in longer-term interest rates.”
Upcoming Data:
- Wed : Japan 1Q GDP,
- Thu : EU Trade Balance, US CPI, Jobless Claims, Housing Starts,
- Fri : Canada CPI, Mexico GDP, US UMichigan Confidence
- Mon: Chicago Fed National Activity Index, RBA Minutes
- Tue: UK PPI, CPI, Dudley Speaks, Japan Merchandise Trade Balance, Australia Westpac Consumer Confidence
Global Macro Trading 