00:00Adam, give us your perspective then on what we're seeing here from equities.
00:03So Asia, we can kind of put to one side because they are catching up with the U.S. a
00:08little bit
00:08and the European trade of Friday.
00:11European equities are set to retreat, U.S. also, but not to erase all the gains of Friday.
00:16So where does that leave us?
00:18Yeah, I think it's kind of very much a case of, as you were,
00:21maybe markets perhaps jumped the gun a little bit on Friday with some of the messaging that we did get
00:25and then we've kind of had a bit more reality presented on top of things.
00:29But like you said, it's kind of very much where, as we were,
00:32there's no real risk off massive moves that we're seeing,
00:35which when you consider the news flow over the weekend that Iran may not arrive to talks,
00:39Hormuz is still blocked, I'd say that's relatively encouraging if you are an equity bull.
00:43And it's kind of symptomatic of the market we've been talking about.
00:47It's very much just looking through a lot of the noise from Iran.
00:50And I think it's going to take something pretty big at this juncture to derail markets.
00:54And I think, you know, obviously you've got the area offset,
00:57which is providing a lot of traction in the market.
00:59But I still think the path of least resistance probably is for equities to go a bit higher.
01:03But you probably have to be quite selective in that approach.
01:06Like I was saying last week, I think Europe, there's a bit of concern there.
01:09I think you're going to have earnings come to focus,
01:11around about 10% of the stock 600 are reporting this week.
01:14And we've been seeing negative EPS and sell surprises for the region.
01:17And so potentially Europe could lag.
01:20You say markets. What about the bond market?
01:22The bond market, I was listening to Chris Waller talking about kind of the inflation concerns that he has right
01:27now.
01:27And he was a dove.
01:28And he's now certainly sounding a lot more hawkish.
01:30Is the bond market going to be as sanguine as the equity market?
01:34Like it never is.
01:35But is it telling us a different narrative?
01:38I think it definitely will do.
01:39I think the bond market is going to be a lot more cautious in pricing out any of the impacts
01:43of the Iran conflict if you do get a positive read this week.
01:46And I think a lot of that is obviously because of the landing zone for energy.
01:49We still don't know about that.
01:51That's keeping central bankers cautious.
01:53And as such, it's going to be hard for bond markets to price that out.
01:55I think, you know, if you look at the ECB, it's a good example.
01:58They're basically telling us to wait till June.
02:01They'll have more stock of information by then.
02:03So you can see a reluctance of markets to price out any potential rate hikes.
02:07And you're seeing that with the ECB in particular, whereby pricing is pretty sticky around about that 50 basis point
02:11move.
02:12How sensitive are Treasuries, do you think, to Kevin Walsh and what we hear from him later this week?
02:17I don't think there'll be too much cut through.
02:18I think obviously it's incredibly interesting to see what he has to say about how he'll potentially lead the Fed.
02:22But, you know, markets ultimately wait to see how the Iran conflict plays out.
02:27I think there's a lot less pressure from the U.S. administration on the Fed.
02:30I mean, we saw Scott Besson saying he understands if they don't want to cut rates in the immediacy.
02:35And I think, you know, it'll be interesting to see what Walsh's stance on AI and productivity is.
02:41But ultimately, as we've also seen, you know, saw a few months ago,
02:44it hasn't really appeared to have too much cut through onto other members of the FMC.
02:48They've kind of pushed back and almost argued the opposite.
02:51And, you know, considering he has only one vote on the FMC,
02:54it's unclear exactly how much cut through into the bond market at this juncture he will make.
02:58Adam, thank you very much indeed.
02:59Adam Linton from our Markets Live team.
03:01Remember, you can get up-to-date analysis and insight from Adam and the rest of the team.
03:04Just go to MLive.
03:05Go on your terminal.
03:05Go on your terminal.
03:05I don't know.
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