Sunset Strip | Aussie Afternoon Institutional Market Wrap

Aussie market made a brave climb back to positive territory through the volatile day after the US market gave back all their Monday bounce overnight. There is US Fed worry….but we don’t see that in play as the implied probability is way below 20%. US Fed is unlikely to move when the market expectations are so low. There is oil worry returning as over supply is expected to now go into 2018…but that was not that substantial as markets are forward looking. The key scare factor seems to be the view that majority of the central banks may suddenly turn off or scale back the QE taps. The yield squeeze has happened plenty of times since GFC, but the central banks are motivated to keep yields down to stop their currency moving up higher. US Fed will not want the US yield to move too high and drag the USD higher..… (VIEW LINK)