Markets Have Run Out Of Steam

Perhaps the real answer to yesterday’s query about yen vols is that markets have run out of steam and that each day looks more or less like every other. EUR/equities/bond yields go down, and a flurry of explanations fly as to why the moves will continue. EUR/equities/bond yields go back up, and another flurry ensues, explaining why the first flurry was wrong and why this move will continue. At the end of the week, you find you’ve gone nowhere and that your P/L bears a strong negative correlation to the number of times you’ve traded. Lather, rinse, repeat.

Maybe today’s US GDP and FOMC announcement will generate some signal, but at this point Macro Man is dubious. It feels like we’re in one of those environments where a weak GDP figure will be waved aside as “old news”, whereas a better-than-expected number will be taken as proof of sprouting “green shoots”. Yawn. As for the Fed, having shot their wad whispering into the Illuminati’s ear ahead of the last meeting, would now appear ot have little capacity to surprise. Unless, of course, the Fed decides to screen a live cage match between Ben Bernanke and Ken Lewis, with Jim Cramer commentating. Like recent price action, it wouldn’t be pretty, but unlike this rubbish it would at least be a bit of fun to watch.

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