Archived IMT (2011.01.28)

US TREASURIES COMPETE WITH GOLD AND OIL ON SAFE HAVEN BUYING AS BOTH Rally alongside usd on intensifying violence in Egypt. ****** USD STABILISES on 3.2% US Q4 GDP emerging from primarily from a healthy combination of rising consumption (PCE +4.45% highest in 4 years) and improved net exports (next exports +8.5% from 6.8%). UNIV OF MICHIGAN 1-year inflation expectations index was revised to 3.4%, its highest since Oct 2008 4%, showing a clear pick up in expectations from the 2.2% low reached in September. This suggests that annual core PCE price index (Feds preferred inflation measure) will most likely have bottomed at 0.8% y/y in January and should give the FOMC hawks (Plosser & Fisher) reason to dissent starting in March. STERLING THE BIGGEST LOSER after slumping UK consumer confidence (see prev IMT). CLEAR FAILURE to regain $1.60 should gradually send flows back to $1.5660 and into $1.5580 support. USD initial inability to follow-up on post GDP bounce was partly attributed to Moody's report indicating a potential revision of US credit rating w/ in 2 years. But the aforementioned technical exhaustion dynamics underline that the US index remains well supported about the all important trendline of 76.