The Bond market understands what’s happening here.  Yields have crashed to 1.56% this morning even in light of the “Better than expected” GDP number.  On the topic of GDP, how do you have the NY Fed Nowcast tracking at 1.22% just last week and our nowcast even below that – and pull the rabbit out of the hat this morning at 2.1% for Q4 2019.  It’s being widely discussed that the Fed massaged or understated the inflation component vs what they’ve been reporting all quarter and boosted the Net Exports component to boost Real GDP and keep it above 2% for the quarter.  Regardless, another y/y rate of change slowdown 2.9 (2018) to 2.3 (2019). 

The Bond market gets it, the USD is coming off, and Oil failed to hold our trend line of 52.95 – NOT GOOD.  The Fed will have to go more dovish in the future to combat what the macro market appears to be front running – our call for Scenario 4 (Growth and Inflation decelerating) in Q2 2020.  It’s happening now.  We know this, and we’ll trade accordingly going forward. 

The British Pound is off to the races.  Along with our call in Gold, Bonds and USD, the British Pound might be our highest conviction call going forward in the currency space.  The BOE met today and held interested rates steady, however downgraded their growth outlook.  Interesting enough, the last major data points out of the UK were positive.  We saw an acceleration in both their employment data as well as their PMI data.  With tomorrow being the official Brexit Day in the UK, we think the economic backdrop is becoming less ambiguous since the onset of Brexit 3yrs ago, and foreign investment will steadily be coming back to the UK creating higher demand for the Sterling.  Cheerio!