Bye Bye Theresa? Britain’s PM May Loses Brexit Vote By 432 To 202 (Disturbance In The Force)

I detect a disturbance in The Force after Great Britain’s Therese May lost the Brexit vote by a whopping 432-202.

The USD Dollar Swap curve is now even more kinked  and the GBPUSD forward curve looks like it hit a wall.

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It is almost as if the Brexit “fears’ have gone away.

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popunfreed

Is this Bye Bye Theresa?

Meanwhile, Nigel Farage and UKIP are singing “What’s the matter with UK Socialists?”

Why Interest Rates Are Not Likely To Rise Much In The Near Future (Ford Cutting Thousands Of European Jobs, China Car Sales Plunge 13% YoY, Etc.)

Since early November 2018 when the 10-year Tteasury note yield hit 3.24%, both the Treasury yield and 30 year mortgage rate (MBA) have plunged.

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Partly to blame is the slowing economies around the globe, particularly in Europe (check out Ford’s announcement of job cuts in Europe: Ford Motor Co.¬†will shed thousands of jobs at its European operations as part of a bid to return the business to profitability with a broad restructuring that could include shuttering factories).

And then there is that 13% YoY decline in China Passenger Car Sales.

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So, despite global zero-interest policies (except for the US), global economies are slowing.

global econ slowing

It is difficult to push US interest rates higher when the global economy is slowing down.

To be sure, there are a whole host of wild cards that could send interest rates rising again: 1) US-China trade agreement, 2) ending the US government shutdown, 3) resolution of the neverending BREXIT issue, 4) France and Germany’s struggles to raise energy prices (Paris Accord?), etc.

The implied probability of a Fed rate hike in this global environment is pretty low.

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And both the US Treasury actives curve and Dollar Swap curve remain kinked.

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Will The Fed emulate Frank Booth from “Blue Velvet” and provide more oxygen to markets?

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