3 Sep 2013
Flash: October risk rally, usd in focus - Societe Generale
FXstreet.com (London) - Kit Jukes, head of currency strategy at Societe Generale said “I'm looking for a ‘proper' risk rally when September ends”.
Key Quotes:
"Better data, a new month and a delay to military action are all decent enough reasons for the yen to fall, peripheral European bonds to out-perform, and high-beta currencies to rally, I am not going to get carried away".
"Military action is only delayed, for starters. A more meaningful EM/risk rally, is likely only once the Fed has announced ‘tapering' and the Treasury has conducted an auction or two thereafter".
"I doubt the new, post-taper clearing price for Treasuries is dramatically different from current levels, but we need to cross that hurdle before market confidence can be rebuilt".
"After that, we shift our attention to the timing and extent of US rate hikes, and since they remain distant, the first move could be to go yield-hunting. So, I'm looking for a ‘proper' risk rally when September ends. For now though, short JPY, long European bonds vs. the US (long Spain vs US for maximum short-term movement) seem like sensible trades".
Key Quotes:
"Better data, a new month and a delay to military action are all decent enough reasons for the yen to fall, peripheral European bonds to out-perform, and high-beta currencies to rally, I am not going to get carried away".
"Military action is only delayed, for starters. A more meaningful EM/risk rally, is likely only once the Fed has announced ‘tapering' and the Treasury has conducted an auction or two thereafter".
"I doubt the new, post-taper clearing price for Treasuries is dramatically different from current levels, but we need to cross that hurdle before market confidence can be rebuilt".
"After that, we shift our attention to the timing and extent of US rate hikes, and since they remain distant, the first move could be to go yield-hunting. So, I'm looking for a ‘proper' risk rally when September ends. For now though, short JPY, long European bonds vs. the US (long Spain vs US for maximum short-term movement) seem like sensible trades".