Wednesday, July 6: Five things the markets speak of
The theme so far in this holiday shortened trading week was all about risk aversion. Investors, it seems preferable to proceed with caution, pushed by the Bank (BoE) of England Act of negative charge of the U.K. economy after the historic vote Brexit. Risky assets took a beating if his actions or currencies, while sovereign yields continue to seek new lows, reflecting a lack of confidence on the global economy.
After the FOMC minutes today (02:00 pm EDT) the market will quickly turn its attention to the non-farm payroll (NFP) report on Friday, when a rebound is expected back after disappointing title in May (+ 38k). The current consensus is for a return to healthy growth of the payroll + 180k and the unemployment rate to tick up to 4.8%. If we get those numbers, he'll make an interesting trading day to close the week, especially now that the different asset classes seem so tight.
Wait a minute today to give more clues on how worried the Fed official were / are a persistent slowdown in the economy in general and the vote called Brexit.
1. cable hangs below £ 1.28 for a new floor of 31 years after BoE warned
The book receives no respite, tumbling new night across the board as investors flee to the safety of bonds and gold.
Brexit fears are again "front and center" after the latest financial stability report BoE published yesterday stressed that the risks of Brexit begin to materialize, with concerns about the deterioration in demand for UK assets become more acute.
The fall overnight, especially came after three UK REITs suspended redemptions, questioning the health of the housing market and the economy as a whole, and raising concerns about withdrawal of investors from UK assets.
the pound has lost 15% since the historic June 23 vote and the next line of support for this battle scarred currency now that the psychological £ 1.30 was £ 1.25 is violated outright.
2. How far can the government's performance?
yields on sovereign bonds in the U.S. and Europe remain in uncharted waters. investor anxiety about a Brexit settled and persistent concerns about the banking system in Italy is now adding to the sense of risk-off this week. U.S. 10-year Treasuries fell -38bps three weeks to + 1.33%. Trade German bunds in deep negative territory (-0.21% for); while gilts give U.K. fell to + 0.78%. As investors seek safety, the yield on the government's obligation 20 years of Japan fell below zero for the first time in trading overnight.
The market is now trading above the levels where bonds bulls may need to walk with extreme caution. Friday's jobs report could be the outlier may require investors and dealers to be fast on foot. A strong relationship can hit the bond market via an excuse to take profits. It would also be a blow to fixed income side on a short-term rate cut from the Fed.
Carney BoE said last week that growth will slow in the coming months and that further interest rate cuts and other measures will be needed. fixed income dealers now expect the BOJ to further ease monetary policy meeting this month (July 27/28) and the ECB to expand its bond purchase program later this year.
3. World stocks are generally weaker
The downward spiral in stocks extended into a third day, the long series of losses in more than two weeks.
World stocks were mostly lower time in overnight trade as investors continued to question the post-Brexit resumed last week in risky assets.
The Stoxx Europe 0 fell 0.2% in early trade, with concerns about Italian banks and UK property fund suspensions exacerbating uncertainty after the referendum on joining EU UK.
FTSE 100 Index the UK rose by 0.1%, as commodity producers gained.
Yen (¥ 100.50), which tends to gain market stress period, continues to rally and is once again encroach on levels that the BOJ will be concerned. The yen dragged down stocks in Japan.
Indices: Stoxx 50 -1.5% in 2770, -0.4% in 6517 FTSE, DAX -1.8% in 9358, -1.5% CAC-40 in 4100, IBEX-35 -1.8% in 7923, FTSE MIB -1.8% to 15,499, SMI -1.0% in 7861, S & P 500 Futures -0.6%
4. gold climbs to 2-year high
investors fear helps to push gold to new heights. The "yellow metal" has climbed to a high of $ 1,371 per ounce before the open stateside two years.
With the firmly focused on the broader European market risk should continue to support the strong appetite for gold. The current interest in futures reached new multi-year highs.
oil futures continue to struggle to rebound after heavy losses Tuesday that Brexit concerns, combined with the relations of production by OPEC peaked in June, continues to weigh on prices.
Brent stable at $ 47.97 a barrel after losing -4.3% Tuesday, while WTI is steady at $ 46.61, having slipped -5% overnight.
5. No surprises Riksbank
The Swedish central bank (Riksbank) said earlier this morning that turbulence created by the UK plan to leave the EU had hit its "confidence in the economic outlook and n 't now expect to raise interest rates as soon as he had thought before."
Swedish politicians have left their main interest rate to 0.5% (as expected) and now expect an increase in borrowing costs at the end of H2 2017, instead of the middle next year. The statement said a "very expansionary monetary policy is needed to provide support to the Swedish economy and inflation."
SEK has strengthened slightly on the news (9.42 vs. 9.44 € €).
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