An excerpt from ANZ note on the week ahead, 'key themes':
Risk markets continue to bounce, alongside data momentum, which is now stretched relative to historic precedents. Although partly expected, given the extreme drop experienced through March, mean reversion in data momentum would likely prove problematic for a market at tactical extremes.
- In the US, rising COVID-19 case numbers and increasing uncertainty over the continuation of fiscal support are expected to become stronger themes in the coming weeks.
- On the other hand, central banks remain poised to support the recovery, by extension dampening volatility which will act as a further tail-wind for risk markets.
- We remain cautious on the tactical outlook, with a period of consolidation the most likely outcome.
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On that part about data momentum, this is the Citi Eco Surprise Index for the US. Wild swings this year so far, and yes, overstretched to the topside now:
