Having passed the first hurdle this morning (PCE did not drop further), The Fed’s December hike is now locked and loaded, but, as former fund manager Richard Breslow notes, at the end of the day, the real elephant in the room is if, when and how fast the big central banks shift toward policy normalization. Everything else is derivative. Get this one right and quibbling over some sector rotation or the relative prospects of the Australian versus New Zealand dollars pale in comparison.
The answer to this question will drive just about every other market.
It’s an interesting issue to contemplate as we wind down a year when sovereign yields, with the exception of China, have been moribund, at best.
All eyes have correctly been on the yield curves but it could very well be that the focus needs to change.
This post was published at Zero Hedge on Nov 30, 2017.