The German index continues to react to headlines coming out of the Middle East, as energy inflation and concerns about supply remain at the forefront of traders’ minds.
The DAX initially pulled back just a touch during the trading session, but we have seen a little bit of noisy behavior as a U.S. official now claims that they've seen some positive communication with the Iranians. Whether or not that's true, we'll have to wait and see because we continue to see questions asked of this.
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But ultimately, this is a market that remains very volatile, very noisy, and a bit lost. In fact, in just the last 20 minutes or so, I've seen 3.5 basis points get shaved off the 10-year yield. The Germans are particularly sensitive to this because they import pretty much all of their energy at this point, and a lot of it comes from that part of the world.
Infrastructure spending
The German government is looking to spend this year and next year on infrastructure. We'll have to wait and see if that plays out as favorable over the longer term. But as things stand right now, this is a market that I believe continues to see sideways action in general, but longer term, probably positive.
The German government is looking to spend this year and next year on infrastructure that should help German industrial companies. And if they can get energy at a reasonable rate, that then shifts the focus more to Germany. It's a little easier to trade.
That being said, these headlines continue to go back and forth, and they continue to move the oil market and the idea of energy inflation, so do keep that in mind.
Overall, though, this is a market I like buying dips. I'm not looking for anything spectacular here. Just if you can find cheap contracts, why not buy them? That's kind of how I look at it.
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