Looking through all the various indications of the “dollar” world, there is seemingly to this moment a great deal of calm. This is in sharp contrast to December where bearishness and tightening were not just evident but dangerously so (across almost every part of the global financial system). But those two observations are not necessarily expected in sequence, as typically markets retrace rather than retreat from assured positions.

Some of that “pause” in direction could have been attributed to uncertainty surrounding Europe, with nobody knowing for sure what the ECB might do about its QE and then the election in Greece clouding everything else. But there remains a lack of conviction even past those two events that perhaps relates to deeper uncertainties.

Again, you would think that with the massive moves in December everything would not just settle down but partially undo. Large moves are almost always met with retracement as a matter of pure market principles. So to see that December’s action remains mostly undisturbed is at least curious.

ABOOK Jan 2015 Pause Ruble

ABOOK Jan 2015 Pause YuanABOOK Jan 2015 Pause Real

The Brazilian real is about the only major currency to see something of a minor rebound in January, as the other BRICs continue at levels more consistent with ongoing “tightness.” This lack of action extends into US credit as well, as the yield curve trades in a band at the bottom end of December’s flattening:

ABOOK Jan 2015 Pause 5s10sABOOK Jan 2015 Pause 30s

The price of gold has held up too, and the sideways trading (in the past week) also fits this pattern.

ABOOK Jan 2015 Pause Gold Real

The eurodollar curve is likewise unchanged and uninteresting in recent weeks (at least until today).

ABOOK Jan 2015 Eurodollar Pre

We can even add high-risk leveraged loans to the “pause”:

ABOOK Jan 2015 Risky Credit Leveraged Lending

I think it fair to say that credit markets have been, for most of January, on the sidelines waiting for something. It might simply be more clarity from the FOMC about what they apparently think is a suicidal end to ZIRP (not because of ZIRP, but that the economy isn’t anything other than artificial, and thus the end of ZIRP will reveal that in the most excruciating way), or even more economic data to confirm or deny the bearish turn in December.

In that respect, commodity prices are already turning lower again as the FOMC’s narrative fails to penetrate physical clearing. Today’s information on US oil inventories did no favors either.

ABOOK Jan 2015 Pause WTI FuturesABOOK Jan 2015 Pause Copper Shorter

It’s almost as if these “markets” are looking for an excuse that December’s more radical bearishness was too much, but then not finding anything credible to reignite even some little amount of hope. In terms of the FOMC, this is almost like pleading with policymakers not to make a huge mistake in piercing bubbles based on an economy that doesn’t actually exist. We will see if today’s determined statement from them has, like funding markets, the opposite effect going forward, confirming and returning the bearishness of December.