Goin’ Down the Road..

Fellin' bad.

The slow turn in Central Bank orientation continued this morning as the BOE under Carney adjusted their forecast upward. The move was "expected" but the change remains significant. Much like the US, the base case is now to move toward neutrality.

The EU finds itself in a difficult spot, once again. Italy's government may turn over again and economies away from Ireland and Germany struggle. The ECB is floating the negative deposit rate balloon again but money markets aren't reacting much. The idea of a penalty deposit now, with the US and Great Britain shifting orientation, would be the deepest cut at coordinated global policy.

Forward Guidance is being leaned on heavily to try and keep participant actions subdued. I think the hoped for FG support will fail. The edu14-edu15-edu16 butterfly around -60/-55 is the anti-FG bet and its popping up in more of our conversations daily. A word advice to FG baiting CB Heads...objects may appear closer than they are.

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