LIVE MARKETS-Worn-out investors don't know what to do

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WORN-OUT INVESTORS DON'T KNOW WHAT TO DO

The Canadian and Mexican currencies sold off sharply along with global shares, at the start of last week, on the news that the U.S. would impose swingeing tariffs, before rebounding when they postponed them.

This week we've got new tariff news, on steel and aluminium, as well as 'reciprocal tariffs', but moves across, share, currency and bond markets are much more muted.

Analysts this morning are trying to explain why.

The bonds folks at Rabo have two theories.

"First, investors are likely somewhat punch drunk as they attempt to parse signal from noise amidst the flurry of announcements during the early days of Trump’s second term."

"Second, ... we may be moving past peak uncertainty with the market having already sufficiently braced for the unpredictability of Trump 2.0," they say.

Mohit Kumar, chief Europe economist at Jefferies offers a related theory: in short, people don't know what to do.

"Clients are unwillingly to deploy capital behind any theme. In rates, there is a range of views over the Fed, but there is no strong catalyst to break the recent range convincingly either higher or lower."

"In equities, while most clients agree that equity markets should remain supported, tariff uncertainty and rotation from the recent tech developments has prevented strong convictions.

"In credit, investors are long not because spreads are compelling, but because there is no reason to be short."

Similarly, we spoke to a G10 FX analyst the other day, who we won't name, since he's talking about his competitors.

He summed up the strategist landscape thusly: "analysts who think you should be long the dollar say: 'don't buy at these levels', analysts who want to be short the dollar say: 'the time's not yet right'"

As a result, no one does anything.

(Alun John)

EARLIER ON LIVE MARKETS:

NEW HIGHS FOR DAX AND FTSE, LUXURY UP CLICK HERE

BEFORE THE BELL: EUROPE STEADY AT PEAKS, UNICREDIT BEATS CLICK HERE

OF TRADE WARS AND (EV) PRICE WARS CLICK HERE