Weekly Review

The week starting Monday 26 May was another week of changeable headlines, highlighting how fragile overall market sentiment remains.

The week began with positivity following the president's announcement that fresh tariffs on Europe would be delayed. The 'risk on' mood was given an extra boost by reports from Japan that measures could be taken to curb the rise of bond yields.

Sentiment got a final boost on Wednesday, when NVIDEA reported another round of 'good earnings' and at the same time, the US supreme court moved to block the 'liberation day' tariffs, deeming the president to have overstepped. But that's where sentiment peaked, as focus turned to the presidents likely reaction of appeals and work arounds. Bringing the dreaded 'uncertainty' word back to the fore. The uncertainty was added to by suggestions US and China talks have stalled.

Friday's slightly soft CORE PCE data is good news, although the market is looking through recent data, with a mind that the next round of data could start show the effect of tariffs.

I begin the new week as uncertain as everyone else, all in all, economic fundamentals remain solid. And I still have a very mild preference for 'tentative risk on trades'. But as the initial 90 day tariff reprieve draws closer, I imagine June will continue to bring (almost daily) shifts in sentiment. And I'll remain nimble, prepared to trade in either direction when momentum aligns with a fresh cause, be it a headline, data release or whatever the market gets it's teeth into at the time.

In other news, a 'hawkish cut' from the RBNZ boosted the NZD. Plus 'hot' inflation data from Australia keeps the AUD on the 'to long list' in times of 'risk on'.

Likewise, 'hot' inflation data from Japan keeps an extra BOJ hike on the table, which is a little counter intuitive given the talk of yield curve control.

Ultimately, as has been the case for a while, the risk environment continues to dominate and I'll be keeping an eye on the VIX, the S&P and yields in an attempt to desipher the days narrative. I'm particularly fond of halftime report and closing bell at the moment, especially when it comes to trying to understand the US bond market.

On a personal note, it was a week of two trades. Both NZD CHF long. The first in the early part of the week when the positive mood aligned with the 'hawkish' RBNZ. The second trade was post the supreme court ruling, I felt the news could boost sentiment for a while and was a little surprised it didn't. Although, if there's one thing we quickly learn about trading, it's to never be surprised by anything.

I continue to be happy with 'only' two trades per week.

Results:

Trade 1: NZD CHF +1.5

Trade 2: NZD CHF -1

Total = +0.5%

Total since start of blog = +40.5% (risking 1% per trade).