Brownian Motion

The markets were ticking along doing not very much. The impressively named UBS Volumintor was talking of 80% ADVs. BOE unch, ditto the ECB (although to be fair the real interest always comes in the press conference anyway) when along comes a rumour that the beleaguered Brown is getting out of Dodge. Markets fell, as did Sterling. I thought they would have firmed given all the bad press he’s been getting. The Sterling move was also attributed to a rumour that JPM had a big sell ticket, c GBP5bn…talk also this was related to the Rio stock sale.

The resources sector was under pressure anyway with a big sell off in CAD, NZD & AUD overnight but the Rios chat clearly hasn’t helped. Never fear however, the panacea for all market wobbles as we know is a less bad macro number. Enter the continuing claims, a mere 6,735k, and that combined with the words from Trichet, which were reasonably sanguine (albeit with the caveat that 1% rates are not necessarily the lows), and the markets feel stable enough.

Interesting to note that equities rallied sharply in the last 30 mins or so yesterday as the Plunge Protection Team buyers came in and the market bounced off its 200 day MAV. See Estoxx below but the chart is the same for the SPX.
With the imminent NFPs tomorrow will this level be held? Most other assets which have broken through the 200 day have not looked back since; see DXY, GBP, the 10yr etc etc. One cross I’m looking at is EURGBP…I’m bearish on it and have been for a long time as I’ve mentioned before…but that is testing its 200 day post all the Brown hoo-ha. It will be interesting to see if the GBP momentum continues.