Friday’s moves reverse as market considers they went too far

•     Friday’s moves reverse as market considers they went too far

–    Fed funds rate expectations regain half of Friday’s losses, 10yr bond yields a bit more

–    Dollar rises against almost every currency it fell against Friday, falls against the one currency it rose against (RUB)

–    No obvious trigger for the reversal, just a sense the move was overdone

–    Rise in stocks despite higher rates shows confidence in US recovery = USD-bullish

–    I still expect repricing of rate expectations to support USD going forward

•     Watch out for “polar vortex” headed to US

–    We could be in for more unseasonably cold weather in US, like last winter

–    Cold could damage crops, push oil prices higher

•     Today:

–    Japan:  Sep current account surplus unexpectedly rose, but USD/JPY moved up

–    Eurozone, UK:  No major indicators

–    Sweden:  Riksbank releases minutes of its Oct policy meeting, when it unexpectedly cut its repo rate to zero

–    US: Government closed for Veteran’s Day. NFIB small business optimism expected to rise slightly.

–    New Zealand:  RBNZ releases Financial Stability Report overnight