Income & Fixed Interest Newsletter – February 2018
The February flash crash served as a warning shot to the market to expect further volatility ahead. The goldilocks narrative of strong growth with benign inflation morphed into ugly inflation and deficit concerns in the US, driving bond yields higher which dragged equity markets lower. Within five trading sessions, the S&P 500 index undid the melt-up of the first three weeks of the year, and by the close of the 8th of February, the market was down over 10% from the peak.
In this Newsletter I take a close look at how global FX markets have been behaving and delve deeper into the prevailing narratives currently underpinning a bidless environment for the US dollar.