Market Mood: A Tired Week and a Splash of Euros
Yesterday’s trading day was a bit like watching a marathon champion try to do a stand‑up routine – the crowds were awash in caution, and the ECB’s press conference was the evening’s highlight, if you can call it that. Central bankers talking about ocean tides to justify policy moves? Sure, why not? If you’re going to swim in a fiscal ocean, you gotta explain the splash.
Short‑Sided Sentiment & A Hint of Cash Flow
For most traders, the week has been a long haul, and the last hard stretch fell on Friday’s ECB stand‑up. The key takeaway? A 25‑basis‑point hike erased the reserve rate cap, but the speech was all about being “meaningfully less restrictive.” That’s a hawk‑ish signal, hinting at a slowness in future cuts, especially now that the deposit rate sits at the edge of neutrality.
Still, inflation fears above the 2% target and a shaky growth outlook mean rates likely stay lower. On the Euro side, this heavyweight move + the German fiscal stimulus created a “best‑of‑all‑worlds” scenario. EUR outpaced 1.08 for the first time since last November and is poised for the biggest weekly gain in five years. Imagine Euro bulls belting out: “Ain’t no stoppin’ us, we’re on the move!”
USD’s Sag, Treasury Gains, and Equity Strains
The U.S. dollar’s steady decline hit the 104 mark yesterday, with investor nerves rattling over the health of the U.S. economy. All G10 currencies gained against the greenback, and the FOMC’s next steps remain a gamble. Personally, I’m leaning toward a bearish USD runway for now.
- Treasure curve gains, especially front‑end, drag down the dollar.
- Growth and inflation expectations are on a slide, fueling bets on a dovish Fed.
- I still find the risk‑reward balance sweet for long Treasuries—tariffs won’t vanish anytime soon, and potential spending cuts loom large.
Equities stay bearish for me. Earnings growth in markets that continue to wrestle with global uncertainty is not looking promising, especially after the U.S. government’s latest tariff twist on Canada and Mexico. Keeping a high‑risk stance on the stock market feels like a safety breach under these cloudy conditions.
Road Ahead: Jobs, Powell, and the Public Pulse
How the market looks tomorrow will largely depend on the February U.S. jobs report:
- Non‑farm payrolls predicted to rise by +160,000, but with a huge forecast spread (+30k to +300k).
- Unemployment steadied at 4.0%.
- Average hourly wages expected to cool to 0.3% MoM, reflecting stronger workforce participation.
Do the “DOGE” policy cuts hit the numbers? The bulk of those tweaks likely appears in March’s report, as most adjustments sat after the survey week.
Regarding Powell, his remarks will likely skip specific policy moves but keep an eye on a bumpy disinflation pathway, a tight labor market, and looming growth risks. Until inflation slackens toward target, the Fed put remains out of reach.
Bottom line: we’re riding a rollercoaster where macro signals seem contradictory, and markets are still gin‑fishing in uncertainty. Keep your eyes on the jobs print and Powell’s commentary for the next big twist.
