City PM TV: A market snapshot
After a number of weeks of strength in global risk assets, some cracks began to emerge in markets this week.
[brid video=”822785″ player=”24372″ title=”Cracks%20are%20Emerging!%20%20%20ShortView%20Morning%20Market%20Hit%20(9th%20July%202021)” duration=”174″ description=”Learn more about the Daily RAG here: https://www.longvieweconomics.com/what-is-the-daily-ragSubscribe to the Daily RAG here: https://www.longvieweconomics.com/the-daily-rag-subscriptionWhat matters today for traders:• G20 finance minsters meeting;• Speech by the BoE’s Bailey on a panel.” uploaddate=”2014-03-31″ thumbnailurl=”//cdn.brid.tv/live/partners/18445/thumb/822785_t_1625823641.png” contentUrl=”//cdn.brid.tv/live/partners/18445/sd/822785.mp4″]
In particular, US 10 & 30 year Treasuries have rallied, amongst other safe havens (e.g. the JPY); US high yield credit spreads have widened; and certain parts of the US equity market have sold off (i.e. the cyclical/interest rate sensitive parts). In addition, and somewhat troublingly, stress continues to grow in the Chinese (and broader Asian) high yield market, with a sharp back up in yields this week. In the past, that has triggered bouts of ‘risk off’ in global markets. The key question therefore is: Has the bullish psychology in markets broken? And, if it has, are markets now rolling over into a wave of risk aversion?
Key events today include the G20 Finance Ministers meeting, as well as comments/speeches by the BoE’s Bailey and ECB’s Lagarde. Further commentary from Fed Presidents this weekend and next week bears watching closely. Of late, their message has increasingly focussed on the need to start tapering asset purchases later this year (e.g. Daly’s comments last week). At the margin, therefore, that adds to the case for near term weakness in risk assets.