I think the market has got too pessimistic on interest rates
Adam Cole
If we do buy the Japan recovery story, then there is probably more buying to be done and that is still the principal flow that will support the yen.
story support flow japan recovery
This flies in the face of mounting evidence that things are looking up for Germany, so the market seems to have shrugged it off and is looking through it.
market face things germany evidence
You can give them the ability to get more junk in there, for better or worse; they like it.
ability give worse
The market is increasingly seeing a risk that the Fed pauses in its rate cycle -- not only that but also the peak in the interest cycle will be considerably lower.
risk market interest
Even if these (falls) reverse partially next month, this is very bad news on domestic demand.
bad news demand
The risk is that the deficit is rather worse than the market is looking for and if that's the case it may swing the focus back to structural dollar negatives and away from the interest rate focus.
focus risk market interest worse
We would expect the Fed to say something about Katrina and what it means for the immediate and long-term impact on activity and I think there's a lot of uncertainty about what they may say.
uncertainty impact
The broad picture shows the economy is growing at much the same pace in the third as the second quarter
growing picture economy
Is still hoping to squeeze one more interest rate cut in.
interest
market interest
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