Monday, May 16: Five Things the markets speak of
Investors are starting this week festival trying shortened trading to avoid making major moves given the lack of fresh trading pins.
The markets are closed in Germany, Denmark, Austria, Switzerland and Norway (Whit Monday). While the holidays are observed in a number of other (including France).
The direction of the capital market this week is expected to be driven again by central banks. The Reserve Bank of Australia (RBA), the European Central Bank (ECB) and the Fed will publish all minutes of their most recent meetings of the policy.
traders Yen will focus on Q1 GDP print Tuesday Japan evening, while sterling traders will have a plethora of data to plow over the next sessions - consumer and producer price indices, sales retail and employment data.
At the end of the week, the ministers of the G7 Finance and their central bank governors will meet respective (May 20/21) ahead of the G7 summit to be hosted in Japan (May 26th / 27).
1. China data disappoints
Chinese data continues to be the "elephant in the room." A number of recent marketed under par n ' has not been able to dent global sentiment significantly market of late. Why not? investors seem to be clinging to the positive rhetoric and assurances given by the People's Bank of China (PBoC).
on open APAC, the PBoC issued a statement assuring that disappointing New loans Friday (six-month low) and M2 money supply (10-month low) would be reversed.
on the weekend, the China retail sales fell to a new 11-month low (10.1% against 10.6% E; YTD Y / Y: 10.3% against 10.4% E), while the industrial production was much lower than expected at + 6.0% against + 6.5% e.
2. crude glut disappeared?
In the space of commodities, crude prices again leading the pack before the open stateside. In overnight trade, crude oil WTI June has rallied 1.5% to $ 47 a barrel to match the highs of last week.
In a note written by Goldman Sachs analysts' weekend, they indicate that the market supply has changed course and entered the territory "deficit". The "oversupply" world that bear speculators trust seems to have been absorbed by the supply disruptions and strong demand.
Traders continue to monitor a number of risk events that have a significant impact on global supply. There are political upheavals in Venezuela, as well as sabotage of oil delta in Nigeria and forest fires in Canada.
Collectively, they persuaded the Goldman analysts to increase their price of US crude prices to $ 50 a barrel for H2 their March estimate of $ 45 per barrel.
3. US Treasury flatteners dominate trading fixed income
The trade-flattening yield curve is again pick up momentum after US retail sales last Friday (+ 1.3%) and consumer confidence (95.8) data points to the resilience of the US economic growth.
A stronger as copy on both accounts FI some dealers believe the Fed may raise rates more than the market to date has been the price.
Last week, Fed Rosengren of the (Boston) warned that the market was behind the curve on the Fed rate action.
Investors are seen to sell short-term debt and moving ahead on the curve in longer-term bonds, a typical configuration to prepare for Fed tightening - / 10-year spread of 2 tightened to 95.4. December term Fed funds show slightly higher odds for a rate hike by year end (48% against 43% before sales to Friday retail
Note :. A US curve flattening also reflects concerns that the dynamic US growth would slow due to the Fed's policy.
4. gold rush
despite playing second fiddle to the money ($ 17.31) yields in the category of precious metals, gold ($ 1,281 + 1%) continues to see strong interest among the growing concern about the negative rates in Europe and Japan and whether the Federal reserve will be able to tighten further. Even the fear of currency war and a slight increase in market volatility is encouraging demand for refuge metal
Note :. Silver (YTD + 24%) leapfrogged gold (YTD + 21%) in mid-April as the best performing precious metal as data signaled an elastic expansion and US Chinese economic stabilization.
gold demand jumped to the second highest level in Q1 (World Gold Council). According to Bloomberg, investments in ETFs have inflated by 25%, investors are taking advantage of lower prices during the last fortnight (price lost 1.6%, ETFs swelled 63.2 tonnes increasing every day) . Farms increased to 1822.3 tonnes -. The most in three years
5. Are fears Brexit price?
Between now and June 23 U.K. referendum, polls and more surrounding noise should have a significant impact on the pound (£ 1.4338).
Some analysts suggest that even a chance of 25% suggests Brexit GBP could negotiate about 3% -4% lower before June 23 U.K. referendum on EU membership. Currently, polls are close to 50:50 between the decided voters.
The odd bookmaker are only 25% to 30% probability of Brexit occur. With the pound following the bookmakers, it would mean little risk of Brexit was fixed in the measurement.
Bank of (BoE) Governor Carney of England did not remember last week about the risks to the UK economy more Brexit. A vote to leave could lead to a "significantly weaker path for growth and a much higher path for inflation", the British pound could fall "significantly" and BoE policymakers would face a "difficult compromise." In translation, the UK would be facing a recession.
the IMF seems to be in agreement with the governor. They warn that a vote in the UK to leave the EU could harm the economy, causing it to shrink by between 1% and 9% over the long term.
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